Question

id control devices. one of central's most popular valves is the western, which has an annual demand of 3600 units. the price of each valve is $39, and the inventory carrying cost is $7.8 per unit per year. a study of the costs involved in placing an order for any of the valves that central stocks concluded that the ordering cost is $160/order. central valve has 250 operating days in a year. do not round intermediate computations. what is the eoq? 384 report as a whole number by rounding what is the number of days between orders? report as a whole number by rounding what is the optimal annual cost of ordering and inventory? report as a whole number by rounding

Answer 1

The EOQ, days between orders, and optimal annual cost are calculated from the given data using the EOQ formula, the formula to calculate frequency of orders, and the total annual cost formula. These calculations help determine the most cost-effective ordering and inventory management strategy for Central Valve's Western valves.

Step-by-step explanation:

The question involves calculating the Economic Order Quantity (EOQ), the number of days between orders, and the optimal annual cost of ordering and inventory for Central Valve's Western valves with the given demand, price, inventory carrying cost, and ordering cost.

To calculate the EOQ, we use the formula EOQ = √((2DS)/H), where D is the annual demand (3600 units), S is the ordering cost ($160/order), and H is the inventory carrying cost per unit per year ($7.8). The EOQ calculation gives us the optimal order quantity that minimizes the total cost.

Next, to find the number of days between orders, we divide the number of operating days by the number of orders per year, which is given by D/EOQ. For the optimal annual cost of ordering and inventory, we use the total cost formula TC = (D/EOQ)*S + (EOQ/2)*H, summing the annual ordering costs and the annual carrying costs.