Environmental considerations-material losses

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Reference no: EM13762091

Environmental considerations, material losses, and waste disposal can be included in the EOQ model to improve inventory-management decisions. Assume that the annual demand for an industrial chemical is 1,200lb, item cost is $5/lb, order cost is $40, and the inventory-holding cost rate (percent of item cost) is 18 percent.

a) Find the EOQ and total cost, assuming no waste disposal.

b) Now assume that 8 percent of the chemical is not used and is disposed of, with a disposal cost of $0.75/lb. Find the EOQ and total cost when disposal costs are invorporated into the model. (Hint: Add to the holding cost the disposal cost times the percent of product that is disposed of.)

c) What implications do these results have for sustainability practices?

Reference no: EM13762091

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