A large distributor of oil-well drilling equipment operated over the past two years with EOQ policies...

 

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A large distributor of oil-well drilling equipment operated over the past two years with EOQ policies based on an annual holding cost rate of 28%. Under the EOQ policy, a particular product has been ordered with a Q* = 80. A recent evaluation of holding costs shows that because of an increase in the interest rate associated with bank loans, the annual holding cost rate should be 31%. a. Develop a general expression showing how the economic order quantity changes when the annual holding cost rate is changed from I to I'. Choose the correct answer below. (i) Q (iii) Q = = -Q* Q* (ii) Q (iv) Q = = I The revised order quantity Q* for the new carrying charge I' is, Q' Q* √Q* b. Using the formula you derived in part a, compute the new economic order quantity for the product. Round your answer to the nearest whole number. A large distributor of oil-well drilling equipment operated over the past two years with EOQ policies based on an annual holding cost rate of 28%. Under the EOQ policy, a particular product has been ordered with a Q* = 80. A recent evaluation of holding costs shows that because of an increase in the interest rate associated with bank loans, the annual holding cost rate should be 31%. a. Develop a general expression showing how the economic order quantity changes when the annual holding cost rate is changed from I to I'. Choose the correct answer below. (i) Q (iii) Q = = -Q* Q* (ii) Q (iv) Q = = I The revised order quantity Q* for the new carrying charge I' is, Q' Q* √Q* b. Using the formula you derived in part a, compute the new economic order quantity for the product. Round your answer to the nearest whole number.

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SOLUTION a ANSWER i Q EXPLANATION The Economic order quantit... View the full answer