a) What is the economic order quantity? units (round your response to the nearest whole number).
a) What is the economic order quantity? units (round your response to the nearest whole number).
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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![**Economic Order Quantity (EOQ) Calculation for Southeastern Bell**
Southeastern Bell maintains a central warehouse for providing field service offices with a specific type of switch connector. The following details are pertinent for calculating the optimal order quantity:
- **Yearly Demand:** 15,900 units
- **Annual Holding Cost:** $25 per unit
- **Order Processing Cost:** $78 per order
- **Operating Days:** 300 days per year
- **Supplier Lead Time:** 2 working days
**Objective:**
a) Determine the economic order quantity (EOQ) using the given data. The EOQ minimizes total inventory costs, which comprise holding and ordering costs. *Round your response to the nearest whole number.*
**EOQ Formula:**
\[
\text{EOQ} = \sqrt{\frac{2DS}{H}}
\]
Where:
- \( D \) = Demand (15,900 units)
- \( S \) = Order cost ($78)
- \( H \) = Holding cost ($25)
Utilize this formula to compute the most cost-effective number of units to order per batch.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F398ce734-0cd0-45d5-83c6-681a63142f42%2Fc6e40acc-0bb3-41a9-803f-4bb878a30ac9%2F3kfd4jf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Economic Order Quantity (EOQ) Calculation for Southeastern Bell**
Southeastern Bell maintains a central warehouse for providing field service offices with a specific type of switch connector. The following details are pertinent for calculating the optimal order quantity:
- **Yearly Demand:** 15,900 units
- **Annual Holding Cost:** $25 per unit
- **Order Processing Cost:** $78 per order
- **Operating Days:** 300 days per year
- **Supplier Lead Time:** 2 working days
**Objective:**
a) Determine the economic order quantity (EOQ) using the given data. The EOQ minimizes total inventory costs, which comprise holding and ordering costs. *Round your response to the nearest whole number.*
**EOQ Formula:**
\[
\text{EOQ} = \sqrt{\frac{2DS}{H}}
\]
Where:
- \( D \) = Demand (15,900 units)
- \( S \) = Order cost ($78)
- \( H \) = Holding cost ($25)
Utilize this formula to compute the most cost-effective number of units to order per batch.
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