Question

Publisher problem: Full court press inc buts slick paper in 1525 pound rolls for textbook paper. Annual demand is 1800 rolls. The cost per roll is $900, and the annual holding cost is 15 percent of the cost. The ordering costs are $225 per order. What is the time between orders in WEEKS in a 52 week year?
a. 0.033.
b. 2.638.
c. 2.253.
d. 1.167.
e. 0.167.

Answer 1

Answer:

C. 2.253

Explanation:

The time between orders in WEEKS in a 52 week year can be calculated as follows

DATA

Annual Demand (D) = 1800 rolls

Cost per roll = $900

Annual holding cost (Ch) = 15% of $900 = $135

Ordering cost (Co) =$225

Solution

EOQ = $\sqrt{\frac{2CoD}{Ch} }$

EOQ = $\sqrt{\frac{2x225x1800}{135} }$

EOQ = 78 rolls

Number of orders = 1800/78

Number of orders = 23.077

The time between orders = 52/23.077

The time between orders = 2.253