Question: Economic Order Quantity Compute the necessary values below to find the MOST economical quantity to order! Demand = 1 2 , 0 0 0 Annual
Economic Order Quantity Compute the necessary values below to find the MOST economical quantity to order!
Demand Annual Requirements or Demand, in units
Cost per item $ Purchase cost per Unit
A $ Annual Usage, in dollars
B $ Administrative costs per order of placing the order
C Carrying costs of the inventory expressed as an annual percentage of the inventory dollar value
EOQ value $exact value
EOQ units rounded number
Using this CONTINUIOUS inventory management system, every time that you need to order this item, you buy EOQ of them!
Next, compute the following values using the EOQ units rounded into whole items, as above
Annual Ordering Cost in dollars
Annual Inventory Holding Cost in dollars
TOTAL Annual Cost in dollars
Why are the Ordering Cost and Holding Cost not exactly equal, as seen on the chart?
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