Question

A motor parts supplier presents the following data in respect of their purchases: annual demand maximum daily requirement average daily requirement carrying cost ordering cost lead time time needed to acquire emergency supplies 212000 units 1800 units 1060 units r1, 80 per unit r 40 per order 14 days 3 days nb: assume that sales are even throughout the year. required: 1.1.1 determine the economic order quantity (eoq). 1.1.2 determine the ordering point. 1.1.3 calculate the danger level.

Answer 1

The economic order quantity (EOQ) is 1337.32 units, the ordering point is 14840 units, and the danger level is 760.68 units.

Step-by-step explanation:

The economic order quantity (EOQ) can be calculated using the formula:

EOQ = sqrt((2 * annual demand * ordering cost) / carrying cost)

Substituting the given values, we get:

EOQ = sqrt((2 * 212000 * 40) / 1.80) = 1337.32 units

The ordering point can be calculated as:

Ordering point = average daily requirement * lead time

Substituting the given values, we get:

Ordering point = 1060 * 14 = 14840 units

The danger level can be calculated as:

Danger level = (average daily requirement * time needed to acquire emergency supplies) - (EOQ)

Substituting the given values, we get:

Danger level = (1060 * 3) - 1337.32 = 760.68 units