Question
explination of answers please so i can undeestand

Homework Answers

Answer #1

ANNUAL DEMAND = 12000

SETUP COST = 50

HOLDING COST = 0.1

DAILY PRODUCTION = 100

DAILY USAGE = DAILY USAGE = 12000 / 300 = 40

UNIT COST = 1

1. EPQ = SQRT(2 * DEMAND * SETUP COST / HOLDING COST) * SQRT(DAILY PRODUCTION / DAILY PRODUCTION - DAILY USAGE) = SQRT(2 * 12000 * 50 / 0.1) * SQRT(100 / 100 - 40) = 4472(ROUNDED)

2. MAXIMUM INVENTORY = (Q / DAILY PRODUCTION) * (DAILY PRODUCTION - DAILY USAGE)

(4472 / 100) * (100 - 40) = 2683(ROUNDED TO NEAREST WHOLE NUMBER)

AVERAGE INVENTORY = MAXIMUM INVENTORY / 2

2683 / 2 = 1342(ROUNDED TO NEAREST WHOLE NUMBER)

ANNUAL HOLDING COST = MAX INVENTORY / 2 * HOLDING COST

2683 / 2 * 0.1 = 134.15

3. ANNUAL SETUP COST = DEMAND / Q * SETUP COST

12000 / 4472 * 50 = 134.17

4. ANNUAL PURCHASE COST = COST PER UNIT * ANNUAL DEMAND = 1 * 12000 = 12000

TOTAL PURCHASE COST = ANNUAL HOLDING COST + ANNUAL ORDERING COST + ANNUAL PURCHASE COST = 134.15 + 134.17 + 12000 = 12268.32

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