Practice Problem:

1. Determine the EOQ for this product assuming you have the following parameters:

Annual Demand = 360 units (D)

Holding cost per unit per year = $1 per unit (H)

Order cost = $100 per order (S)

1.4 Given the data above, and assuming a 300-day work year, how many orders should be processed per year? What is the expected time between orders?

1.5 What is the total cost for the inventory policy used in PP 1.3?

1.6 Based on the material from PP's 1.3 to 1.5, what would the cost be if the demand was actually higher than estimated (e.g., 500 units instead of 360 units), but the EOQ established in PP 1.3 is used? What will be the actual total cost?