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natta225 [31]
3 years ago
8

The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. Th

e ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. Currently, the purchase cost is $40 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days. How many units should the company order each time an order is placed if the company wishes to minimize total inventory cost?
Business
1 answer:
Mumz [18]3 years ago
8 0

Answer:

The company should order 100 units to minimize total inventory cost.

Explanation:

Given,

Annual Demand, D = 2,000 units

Order cost, S = $20

Purchase cost = $40

Holding cost, H = Purchase cost x percentage of holding cost

Holding cost = $40 × 20%

Holding cost = $8

We know, the company should order the highest number of products with a minimum cost, and for that, the company uses economic order quantity. Hence,

Economic Order Quantity (EOQ) = \sqrt\frac{2*D*S}{H} }

EOQ = \sqrt \frac{2*2,000*20}{8}

EOQ = \sqrt{10,000}

EOQ = 100

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A Japanese insurance company purchases U.S. government securities. From the perspective of the United States, the balance of tra
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a. not change; improve

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8 0
2 years ago
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You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money?
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3 0
3 years ago
A flying squid (family Ommastrephidae) is able to "jump" off the surface of the sea by taking water into its body cavity and the
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d =2.82m

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momentum before ejection = momentum after ejection

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B. we use the equation vf^²=v0^²+2ad

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Therefore,

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