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Practical Management Science

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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**William Beville's Computer Training School Inventory Analysis**

**Objective:**

To determine the Economic Order Quantity (EOQ) for workbooks used in training.

**Inventory Characteristics:**

- **Demand (D):** 19,500 units/year
- **Ordering Cost (S):** $25/order
- **Holding Cost (H):** $5/unit/year

**Task:**

a) Calculate the EOQ for the workbooks. Round your response to the nearest whole number.

**Methodology:**

To find the EOQ, you would typically use the EOQ formula:

\[ \text{EOQ} = \sqrt{\frac{2DS}{H}} \]

Plug in the values provided for Demand, Ordering Cost, and Holding Cost to solve for the EOQ.

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 $102, and the inventory carrying cost is $11 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 per year).

a) What is the EOQ? □ units *(round your response to two decimal places)*.

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