Answer: See explanation
Explanation:
Here is the complete question:
Nowlin Pipe & Steel has projected sales of 9,800 pipes this year, an ordering cost of $6 per order, and carrying costs of $1.50 per pipe.
a. What is the economic ordering quantity?
b. How many orders will be placed during the year?
c. What will the average inventory be?
a. Annual Demand = 9800 pipes
Cost per order = $6
Carrying cost per unit = $1.5
EOQ = ✓[(2 x Annual demand x cost per order)/carrying cost per order]
= ✓2 × 9800 × 6/1.5
= ✓78400
= 280 units
b. Number of orders orders placed would be:
= 9800/280
= 25 orders
c. Average inventory would be calculated as:
= 280/2
= 140 units
