Reference no: EM131153935
Using the appropriate equation associated with either the EOQ or EPQ model to answer the following questions:
a) In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, will the EOQ value increase or decrease and by what percentage?
b) A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The lead-time is doubling from 2 days to 4 days, what is the impact to the economic order quantity? Why?
c) In the basic EPQ model, if the cost of holding a unit of inventory for a year increase by 50%, and all other values remain constant, will the EPQ value increase or decrease and by what percentage?
d) A production order quantity problem has a daily demand rate = 20 and a daily production rate = 40. The production order quantity for this problem is approximately 450 units. What is the average inventory for this problem?
Please show all work and explinations.
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