What is the economic order quantity

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Reference no: EM133853322

Assignment:

ASC Machine Shop uses 2,500 brackets over the course of a year. These brackets are purchased from their supplier, Best Brackets, located 90 miles away. The following information is known about the brackets:

• Annual demand: 2,500

• Holding cost-per bracket, per year: $1.50

• Order cost, per order: $18.75

• Lead time: 2 Days

• Working days per year: 250 Note: This is a corporate operation, and there are 250 working days per year.

Download this template to complete this assignment: Unit 4 IP Template. Using what you have learned, use the template to calculate your answers, and then respond to the following questions:

1. Given the information, what is the economic order quantity (EOQ)?

2. Once you have the EOQ determined, provide the average inventory. What is the annual inventory holding cost based on this information?

3. Knowing the EOQ, how many orders are made each year? What is the annual order cost based off this information?

4. Now that you know the EOQ, what is the total annual cost of inventory?

5. What is the time between orders?

6. Why are the EOQ and ROP important for operations and planning? Provide at least 2 examples.

Reference no: EM133853322

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