the annual demand for a product is 800 unit a unit price of the product is #0.02. If the ordering cost is # and the holding cost is 10% of the unit price ; determine the I) EOQ in the units ii) total variable cost iii) number of orders per annum.
plz what it the solution... I posted it before but no answer
help help
Since the math teachers have avoided this question, I'll comment.
Is some of the information missing?
unit price is 2 cents?
ordering price is ?
what is a holding price?
10 % of 2 cents of negligible.
The problem states that the demand is 800 units per year.
To find the EOQ (Economic Order Quantity) and other related values, we need to use the following formulas:
EOQ = √((2 * D * S) / H)
Total Variable Cost = D * P + (D / EOQ) * S + (EOQ / 2) * H
Number of Orders per Annum = D / EOQ
Where:
D = Annual Demand
S = Ordering Cost per Order
H = Holding Cost per Unit
P = Unit Price
Given: D = 800 units, P = #0.02, S = #, H = 0.1 * P
Now, let's substitute the given values into the formulas to find the answers step-by-step.
I) EOQ:
EOQ = √((2 * D * S) / H)
EOQ = √((2 * 800 * S) / (0.1 * P))
EOQ = √((1600 * S) / (0.1 * #0.02))
EOQ = √((1600 * S) / (#0.002))
EOQ = √(800,000 * S)#0.002
II) Total Variable Cost:
Total Variable Cost = D * P + (D / EOQ) * S + (EOQ / 2) * H
Total Variable Cost = 800 * #0.02 + (800 / EOQ) * S + (EOQ / 2) * 0.1 * #0.02
Total Variable Cost = 16 + (800 / EOQ) * S + (EOQ / 2) * 0.002
III) Number of Orders per Annum:
Number of Orders per Annum = D / EOQ
Number of Orders per Annum = 800 / EOQ
Please provide the value of the ordering cost per order (S) so that I can help you calculate the EOQ, total variable cost, and number of orders per annum.
To find the solution, we need to use the Economic Order Quantity (EOQ) formula. The formula is given as follows:
EOQ = √((2 * D * S) / H)
Where:
D = Annual demand for the product (in units)
S = Ordering cost per order
H = Holding cost per unit per year
In this case, we are given:
Annual demand (D) = 800 units
Unit price = #0.02
Ordering cost (S) = #
Holding cost (H) = 10% of the unit price = 0.10 * 0.02 = #0.002
Now, let's substitute these values into the formula to find the solutions:
I) EOQ in units:
EOQ = √((2 * 800 * #) / #0.002)
EOQ = √((1600 * #) / #0.002)
EOQ = √(800,000 / 0.002)
EOQ = √(4,000,000,000)
EOQ ≈ 63,246 units
Therefore, the Economic Order Quantity (EOQ) is approximately 63,246 units.
II) Total variable cost:
Total variable cost is the sum of ordering cost and holding cost.
Ordering cost = S * (D / EOQ)
Ordering cost = # * (800 / 63,246)
Holding cost = H * (EOQ / 2)
Holding cost = #0.002 * (63,246 / 2)
Total variable cost = Ordering cost + Holding cost
Substitute the values and calculate.
III) Number of orders per annum:
Number of orders per annum is the annual demand divided by the Economic Order Quantity (EOQ).
Number of orders per annum = D / EOQ
Number of orders per annum = 800 / 63,246
Use the calculator to perform the calculation.
Please note that the "#" symbol in the question represents missing values. You need to provide the actual values for ordering cost and holding cost in order to calculate the total variable cost and number of orders per annum accurately.