FORMULA:

QUESTION 1

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Economic Order Quantity (EOQ) Annual Ordering Cost = Co @ () Annual Holding Cost = - Q 2 Ch Q = number of units to order D = annual demand of inventory items Ch = holding (carrying) cost of one units per year Co = ordering cost per order = = TC = Annual Ordering Cost + Annual Holding Cost = TC= @ Co + Ch 2 2DC. EOQ = (* = = = Ch i. Hijrah Enterprise uses 1,500 units of air filters a year for it auto services. The air filters are purchased from a supplier for RM10 per unit. The lead time for receiving the orders is 4 days and the annual holding cost per unit is 10% of the unit cost. It is also known that ordering cost is RM25 per order and Hijrah Enterprise operates 50 weeks per year with 6 days per week. Determine: a. the economic order quantity (EOQ). (3 marks) b. the total inventory cost. (5 marks) c. the length of each inventory cycle. (4 marks) d. the reorder point (ROP). (4 marks)