contestada

Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 14,000. The annual holding cost per unit is $3.75, and the cost to place an order is $65.
a. What is the economic order quantity? The EOQ is 697 . Enter your response rounded to the nearest whole number)
b. Suppose demand for TricoFlexers doubles, to 28,000.

Respuesta :

jepessoa

Answer:

a)

economic order quantity (EOQ) = √(2SD/H)

  • S = order cost = 65
  • D = annual demand = 14,000
  • H = holding cost = 3.75

EOQ = √[2 x 65 x 14,000) / 3.75] = 696.66 ≈ 697 units

b)

if demand increases to 28,000, then:

EOQ = √[2 x 65 x 28,000) / 3.75] = 985.22 ≈ 985 units

tutorAnne

The economic order quantity when annual demand is 14,000units is 697 units and when the annual demand doubles, The EOQ becomes 985 units.

Economic order quantity shows the optimum batch quantity  a company should purchase in order to minimize costs.

It is calculated as

Economic order quantity (EOQ) = √(2x D x S / H)

where

D = annual demand in units= 14,000units

S =  cost per order = $65

H = holding cost = $3.75

Solving:

EOQ = √{2 x 65 x 14,000) / 3.75] = 697 units

 

b)

Suppose  demand doubles to 28,000, Using same equation, we have  

EOQ = √[2 x 65 x 28,000) / 3.75] = 985 units

See similar question here:https://brainly.com/question/22821211

Otras preguntas