A6: CH 9--INVENTORY-Mohammed Alzahrani https://xlitemprod.pearsoncmg.

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Instructor: John Bing

Student: Mohammed Alzahrani
Course: BUA 345--Operations & Supply Assignment: A6: CH 9--INVENTORY
Date: 07/18/19
Chain Management

Babble, Inc., buys 375 blank cassette tapes per month for use in producing foreign language courseware. The ordering cost
is $11.75. Holding cost is $0.35 per cassette per year.

a. How many tapes should Babble order at a time?

The economic order quantity is:

2DS
EOQ = ,
H

where D is demand in tapes per year, S is the ordering cost, and H is the holding cost per tape per year.

D = 375 12 = 4,500 tapes;

S = $11.75;
H = $0.35.

2 4,500 11.75
EOQ = = 550 tapes.
0.35

b. What is the time between orders?

The time between orders, expressed in months, is:

EOQ
TBOEOQ = ,
D

where EOC is the economic order quantity and D is demand in tapes per month.

550
TBO = = 1.5 months.
375

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