(Oct 2016)(EOQ – Tabulation method)

i) Material Alpha

Annual demand (D) = 3,000 x 2 x 12

= 72,000 kg

Ordering cost (Co) = RM25 per order

Storage cost (Cs) = RM1 per kg

ii)

1) Quantity or order size (Q) 72,000/30 72,000/40 72,000/50

= 2,400 kg = 1,800 kg = 1,440 kg

2) No of purchase order (D/Q) 30 times 40 times 50 times

3) Average stock qty (Q/2) 2,400/2 1,800/2 1,440/2

= 1,200 kg = 900 kg = 720 kg

4) Total ordering cost 30 x RM25 40 x RM25 50 x RM25

(D/Q x Co) = RM750 = RM1,000 = RM
1,250

5) Total storage cost 1,200 x RM1 900 x RM1 720 x RM1

(Q/2 x Cs) = RM1,200 = RM900 = RM720

6) Total costs RM750+RM1,200 RM1,900 RM1,970

= Total Co + Total Cs = RM1,950

(Lowest cost)

iii) EOQ = 1,800 kg (It gives the lowest cost)