EAM 503 Lecture Notes - Lecture 20: Lemar, Reagent, Carrying Cost
16 Jul 2021
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The abc co. is planning to stock a new product. Carrying cost = 28% /year of inventory value held. a determine the optimal number of units per order: find the optimal number of orders/year, find the annual total inventory cost. Solution: x0 = 2cb/zp = 2*5400*55/365*0. 28 = ~76 units/order, n0 = c/x0 =5400 / 76 = ~71 orders/year, ke= 2cbzp = 2*5400*55*365*0. 28 = 7791. 46 mu/year. Solution: x0 = 2cb/e= 2*(400*12)*120/35 = 181. 42 units/order, ke= 2cbe= 2*(400*12)*120*35 = 6349. 80 mu/year. Azim furniture company handles several lines of furniture, one of which is the popular layback model tt chair. The manager, mr. farmerson, has decided to determine by use of the eoq model the best quantity to obtain in each order. Farmerson has determined from past invoices that he has sold about 200 chair during each of the past five years at a fairly uniform rate and he expects to continue at that rate.
