Question

Annual demand of a part is 4,153 items. Inventory holding cost is $28 per item per year and ordering cost is $166 per item. If the EOQ scheme is followed to order this part, calculate the annual number of orders to be plac

Answer 1

222

Step-by-step explanation:

Economic Order Quantity = √[(2XCₒXD)/Cₕ]

Where:

Cₕ = cost of holding a unit of inventory for a year

Cₒ = cost of placing an order

D = annual demand

Ordering cost, Cₒ= $166

Annual demand, D= 4,153

Inventory holding cost, per item per year, Cₕ = $28

Economic Order Quantity = √[(2X166X4153)/28]

=√[1378796/28]

=√49242.71

=221.9

=222

The Annual Number of Orders to be placed is 222.