G H Economic Order Quantity Compute the necessary values below to find the MOST economical quantity to order! Demand 12,000 Annual Requirements or Demand Cost per item = $ 160.00 Purchase cost per Unit A- $ 1,920,000 Annual Usage, in dollars B = $ 115.00 Administrative costs per order of placing the order $ $ C= 28% Carrying costs of the inventory (expressed as an annual percentage of the inventory dollar value) $ 3 EOQ value EOQ units (exact value) (rounded number) Annual Cost Annual Ordering Cost = Annual Inventory Holding Cost = TOTAL Annual Cost = in dollars in dollars in dollars Why are these two values not exactly equal, as seen on the chart? Using this CONTINUIOUS inventory management system, every time that you need to order this item, you buy EOQ of them! 3- When to order is another question.... See the next assignment to compute the Reorder Point. EOQ example Chart data TE EOQ = 2AB/C Where EOQ A B the most economic order size, in dollars annual usage, in dollars administrative costs per order of placing the order carrying costs of the inventory (expressed as an annual percentage of the inventory dollar value) C= Demand 12,000 Annual Requirements or Demand Cost per item = $ 160.00 Purchase cost per Unit B= $ 115.00 Administrative costs per order of placing the order 28% Carrying costs of the inventory (expressed as an annual percentage of the inventory dollar value) CE E0Q= 0 0 Min Q Max Q 0 Q 0 0 Annual Order Annual Holding Cost Cost #DIV/0! $ #DIV/0! $ #DIV/0! $ #DIV/0! $ #DIV/0! $ Total Cost #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 0 Using the form 0 1 EOQ example An Chart data Using the formulas on the left the below table if copy/paste #only. Q Annual Order Annual Holding Total Cost Cost Cost $ 5,123 $ 5,124 $ 10,247 5,208 $ 5,040 $ 10,248 244 Optimal EOQ - Case lot only Q = 240 Difference in Annual Cost 1