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A local artisan uses supplies purchased from an overseas supplier. The owner believes the assumptions of the EOQ model are met reasonably well. Minimization of inventory costs is her objective. Relevant data, from the files of the craft firm, are annual demand (D) =150 units, ordering cost (S) = $42 per order, and holding cost (H) = $4 per unit per year
a. Calculate the Economic Order Quantity?
b. Using the EOQ, how many orders will the owner place per year?
c. What is the annual inventory costs (Order Cost + Holding Cost) associated with this Economic Order Quantity?
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