Question: Course: Logistics Management Question Number 02 1) Briefly explain five of the assumptions leading to the basic economic order quantity model (EOQ). (03 marks) 2)

Course: Logistics Management

Question Number 02 1) Briefly explain five of the assumptions leading to the basic economic order quantity model (EOQ). (03 marks) 2) The Star Equipment Company purchases 54,000 bearing assemblies each year at a unit cost of $40.00. The holding cost is $9.00 per unit per year, and the ordering cost is $20.00. (a) What is the economic order quantity? (02 marks) (b) How many orders should be placed per year? (02 marks) (c) If the lead time is one (01) month, what is the re-order point for the assemblies? (02 marks)

Marks distribution of the question is as follows: Clarity of explanation/ Method: 75% Reasoning/ Rationality/ Logic: 25%

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