Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $103, andthe inventory carrying cost is $8 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days peryear).a) What is the EOQ? units (round your response to two decimal places).

Given - Annual Demand (D) = 5,900 units Ordering Cost (S) = $29 Holding or carrying cost (H) = $8(a) Economic Order Quantity (EOQ): EOQ = 2×D×SH = 2×5900×298 =3422008 =42775 =206.82 ~207 units Economic order quantity (EOQ) = 207 units

Answered: Thomas Kratzer is the purchasing…

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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