usage rate/mont 20000 2500

DA = 240,000 DB = 30000
S= 500 S= 500
CA = 5 CB = 4
h= 20% h= 20%

Calculating the EOQ for each product

EOQ (A)= SQRT(( 2SDA)/(H*CA))

15491.933

EOQ (B) = SQRT(( 2SDB)/(H*CB))

6123.724

EOQ (C ) = SQRT(( 2SDC)/(H*CC))

3286.335

Now, calculate the total cost for each product

TCA (240000 /15491.93)* 500 +( 15491.93/2) * .2 *5

15491.933

TCB (30000 /6123.724)* 500 +( 6123.724/2) * .2 *4

4898.979

TCC (10800 /3286.335)* 500 +( 3286.335/2) * .2 *5

3286.335

Total cost = 23677.248

Joint order from suppliers A, B, and C

DA = 240,000 DB = 30000
S= 100 S= 100
CA = 5 CB = 4
h= 20% h= 20%

S = 700

First, calculate the optimal joint order frequency

n = SQRT((240000*.2*5 +30000*.2*4+10800*.2*5)/2*700)

14.0102003657

Calculation of the order quantities corresponding to n

QA = DA/n 17130.376

QB = DB/n 2141.297

QC = DC/n 770.867

Calculation of holding and order cost

Holding cost for product from supp8565.18799647

Holding cost for product from supp856.518799647
Holding cost for product from supp385.433459841
Total holding Cost 9807.14025596

Total ordering cost 9807.14025596

Total cost 19614.2805119

Savings
23677.248 - 19614.3

4062.968
 900
DC = 10800
S= 500
CC = 5
h= 20%

DC = 10800
S= 100
CC = 5
h= 20%