Exercises $20\mathrm{.}7$

Economic Order Quantity

Objective $1$Objective $1$Describe the just$-$in$-$case inventory management model.

Refer to the data in Exercise $20\mathrm{.}6.$

Required:

Compute the economic order quantity.

SHOW ANSWER

Check Figures:

EOQ $=1,600$

Compute the ordering, carrying, and total costs for the EOQ.

SHOW ANSWER

Check Figures: Total cost $=$ $$24,000$

How much money does using the EOQ policy save the company over the policy of purchasing $4,000$ plastic housing units per order?