Chapter 12, Problem 11P

(a)

Summary Introduction

Interpretation:

The economic order quantity.

Concept Introduction:

To get the economic order quantity using the formula $EOQ=\sqrt{\frac{2\times Demand\times ordering\cos t}{unitinventory\cos t}}$

(b)

Summary Introduction

Interpretation:

The average inventory level.

Concept Introduction:

To get the average inventory level using the formula $I_{avg}=\frac{Q}{2}$

(c)

Summary Introduction

Interpretation:

The number of orders placed per year.

Concept Introduction:

To get the number of place per year using the formula $N=\frac{deamnd}{orderqunaity}$

(d)

Summary Introduction

Interpretation:

The total annual holding cost.

Concept Introduction:

To get the annual holding cost using the formula $C_{IH}=Averageinventory\times holding\cos t$

(e)

Summary Introduction

Interpretation:

The total annual holding cost.

Concept Introduction:

To get the inventory holding cost using the formula $C_o=\left(no.oforderplacedperyear\right)\times \left(\cos ttoplaceperyear\right)$

(f)

Summary Introduction

Interpretation:

The cost annual cost.

Concept Introduction:

To get the annual cost using the formula $C=Annualinventoryholding\cos t+Totalordering\cos t$