Thomas Kratzer

D= 6,000
H= 10
S= 30
Wd = 250
U= 120
L= 5
Pd = 100

a What is the EOQ

√(2𝐷𝑆/𝐻)
EOQ =

√((2 (6,000) 30)/10)

EOQ =

EOQ = 189 Units

b What is the average inventory if the EOQ is used?

= �/2

189/2

= 94.5 Units

c What is the optimal number of orders per year?

𝐷/Q
=

6,000/189
=

= 31.75 Units

d What is the optimal number of days in between any two orders?

( (𝐸𝑂�)(𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠) )/𝐷
=

189/6,000 250
=

= 7.88

e What is the annual cost of ordering and holding inventory?

𝐷/Q (𝑆)
+ �/2 (𝐻)
TC =
6,000/189 (30) 189/2 (10)
+
TC =
 +
TC =
TC = 952.38 + 945.00
TC = 1,897.38

f What is the total annual inventory cost, including the cost of the 6,000 units?
Q D
C = 2 (H)Q+ (S) +
PD 189/2 (10) 6,000/189 (30) 6,000(100)
C= + +

C = 945 + 952.38 + 600,000

C = 601,897.38