Saud Bhawan creates a demand of 10800 tires in a year. The company’s inventory carrying (holding) cost is estimated to be OMR 3 per unit per year and the ordering (setup) cost is OMR 50 per order. Calculate the Economic Order Quantity (EOQ). What is the number of orders per year? Compute the average annual setup (ordering) cost. Compute the annual average inventory. What is the average annual holding (carrying) cost? Compute the annual total cost.
Saud Bhawan creates a demand of 10800 tires in a year. The company’s inventory carrying (holding) cost is estimated to be OMR 3 per unit per year and the ordering (setup) cost is OMR 50 per order. Calculate the Economic Order Quantity (EOQ). What is the number of orders per year? Compute the average annual setup (ordering) cost. Compute the annual average inventory. What is the average annual holding (carrying) cost? Compute the annual total cost.
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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- Saud Bhawan creates a demand of 10800 tires in a year. The company’s inventory carrying (holding) cost is estimated to be OMR 3 per unit per year and the ordering (setup) cost is OMR 50 per order.
- Calculate the Economic Order Quantity (EOQ).
- What is the number of orders per year?
- Compute the average annual setup (ordering) cost.
- Compute the annual average inventory.
- What is the average annual holding (carrying) cost?
Compute the annual total cost.
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Step 1: Define Economic order quantity
VIEWStep 2: Calculate the Economic Order Quantity
VIEWStep 3: Calculate the number of orders per year
VIEWStep 4: Calculate the average annual setup (ordering) cost.
VIEWStep 5: Calculate the annual average inventory
VIEWStep 6: Calculate the average annual holding (carrying) cost
VIEWStep 7: Calculate the annual total cost.
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