Final answer:
The Economic Order Quantity (EOQ) is calculated using a formula involving annual demand, ordering cost, and holding cost; however, specific values are needed for calculation. Similarly, the Total Annual Cost is determined using EOQ among other factors but cannot be provided without concrete data.
Step-by-step explanation:
The Economic Order Quantity (EOQ) is an important concept in inventory management that determines the optimum number of units to order to minimize the total costs associated with inventory. These costs typically include ordering costs, holding costs, and stockout costs, but since no backorders are permitted, the model focuses on ordering and holding costs. To calculate EOQ, one would normally use the formula:
EOQ = √((2DS) / H)
where D is the annual demand, S is the ordering cost per order, and H is the holding cost per unit per year. We do not have specific values provided for these variables, so we cannot calculate a specific EOQ value. However, if we did have these values, we could plug them into the formula to find the EOQ.
To calculate the Total Annual Cost (TC), you would use:
TC = (D/Q)S + (Q/2)H + PD
where P is the purchase cost per unit and Q is the quantity ordered (EOQ). Again, without concrete values, we cannot calculate an exact total annual cost.
The step-by-step explanation would normally involve identifying the values for annual demand, ordering cost, and holding cost, calculating EOQ using the EOQ formula, and then using the EOQ to calculate the total annual costs.