A company produces and sells 12,000 electronic gadgets annually at a consistent rate. The cost per order is $130, and the holding cost per unit per year is $1.50. Using the EOQ model in Excel, determine the optimal order quantity and total annual cost to minimize ordering and holding costs. What is the ideal order quantity to achieve this (non-integer numbers are ok)?

If the supplier offers a discount on the ordering cost, reducing it to $60 per order for orders of 3,000 units or more, should the company accept the discount? Model this scenario as a new EOQ problem with K=$60, adding a constraint to ensure the order quantity is above 3,000 units. Calculate the new cost.

Answer rating: 100% (QA)

Calculate the annual demand 12000 units Calculate the ordering cost per order 130 Calculate the hold... View the full answer