Question

CRA company dedicated to the purchese and distibution of industrial engines has an annual demand of 12.000 units everly distributed throughout the 360 days of the year (consider a year as 12 months of 30 diys). The engines are manutactured by a supplier in Belgium, with a delivery ime of one month, unit acquisition costs of 600 euroshnit, and a cost for each leunch of 4000 euros. The unit maintenance costs are approximated as cpportunity costs, with en interest rate of 30% per year, and the breakdown costs are 1 euro per unit per dey. It is requested:

Economic batch

Answer 1

To determine the economic order quantity (EOQ), specifics such as the holding cost, including opportunity cost and breakdown cost, are required to employ the EOQ formula, which is rooted in minimizing the combined costs of ordering and holding inventory.

Step-by-step explanation:

The calculation of the economic order quantity (EOQ) is a fundamental concept in inventory management and operations that is designed to minimize the total costs of inventory, including costs of ordering and holding stock. Given an annual demand of 12,000 units, a delivery time of one month, a unit acquisition cost of 600 euros, and a launch (ordering) cost of 4,000 euros, the student is looking to calculate the EOQ. Additionally, the holding cost includes opportunity costs represented by an interest rate of 30% annually and the breakdown costs are 1 euro per unit per day. To calculate the EOQ, one would use the formula: √((2 * annual demand * ordering cost) / holding cost) where the holding cost is the sum of the storage cost (opportunity costs) and the breakdown costs per unit. However, with the given information, numerical specifics like the actual holding cost per unit per year, which includes the storage cost and the breakdown costs, are necessary to complete the EOQ calculation.