Question

Zip Games purchases blank DVD disks onto which it copies its software for sale through its mail

Answer 1

Answer:

a. 575 units

b. 107.83 orders

c.  3.38 days

Explanation:

a. The computation of the economic order quantity is shown below:

= $\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

where,

Annual demand = 62,000 disk

Ordering cost = $16

Carrying cost = $0.25 × 24% = $6

Now put these values to the above formula  

So, the value would equal to

= $\sqrt{\frac{2\times \text{62,000}\times \text{\ 16}}{\text{\ 6}}}$

= 575 units

b. The number of orders would be equal to

= Annual demand ÷ economic order quantity

= 62,000 ÷ 575 units

= 107.83 orders

c. The frequently order would be

= Total number of days in a year ÷ number of orders in a year

= 365 days ÷ 107.83 orders

= 3.38 days