Prepare your own sample problems and solutions for the economic order quantity (Total Annual Cost, Reorder Point).

Formula:

R = dl R = reorder point d = average daily demand L = lead time in days Example : REORDER If average daily demand is 40 units and lead POINT time is five days, then the reorder point =(40 units x 5 days) = 200 *When the inventory reaches 200, it is time to place an order. ECONOMIC ORDER QUANTITY Total Cost TC = total annual cost TC - (85) + (9#) D = annual demand Q = quantity to be ordered H =annual holding cost S= ordering or setup cost Economic Order 2DS EOQ Quantity @VH MODEL D = annual demand Q = Optimal order quantity H =annual holding cost 5= ordering or setup cost