Managing Cycle Inventory
Can you help me please with answering the following questions? Many thanks!
Homework Answers
annual demand = 50x40 =2000
EOQ = [ 2 x demand per annum x ordering cost / cost of holding one unit per year]1/2
= [ 2 x 2000 x4000 /6250x0.25]1/2 = 101.19
number of orders = 2000 /101.19 =19.764
time between orders = EOQ / weekly consumption = 101.19 /40 = 2.529 weeks
Total cost = purchase cost + holding cost + ordering cost
= 6250 x 2000+ 101.19 /2 x6250x0.25+ 4000x 19.764 = 12500000+158111
= 12658111
Total price = 7000x2000 = 14000000
Profit = 14000000 -12658111 = 1341889
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Managing Cycle Inventory
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