Question

You have a product with annual demand of 10500 , ordering cost of 200 , and annual holding cost of 19. You want to order according to the EOQ. What is your average inventory? Answer to the nearest whole number,

Answer 1

To calculate the average inventory using EOQ, you can use the formula Average Inventory = EOQ/2. By plugging in the given values, the EOQ is calculated as 925.93 (rounded to the nearest whole number), which results in an average inventory of 463 (rounded to the nearest whole number).

Step-by-step explanation:

To calculate the average inventory using the Economic Order Quantity (EOQ), you need to use the formula:

Average Inventory = EOQ/2

The EOQ formula is:

EOQ = sqrt((2 * Demand * Ordering Cost) / Holding Cost)

Plugging in the values given: Demand = 10500, Ordering Cost = 200, Holding Cost = 19. Calculating the EOQ:

EOQ = sqrt((2 * 10500 * 200) / 19) = 925.93 (rounded to the nearest whole number)

Finally, calculating the average inventory:

Average Inventory = 925.93/2 = 463 (rounded to the nearest whole number)