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27 February, 09:06

The weekly demand is 200 units. The cost to place an order is $2.00, and the time from ordering to receipt is four weeks. The weekly inventory carrying cost is $0.01 per unit. Suppose that the weekly production rate is 500 units. What is the optimal EPQ quantity

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  1. 27 February, 09:25
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    Optimal EPQ quantity = 2633

    Explanation:

    Annual demand = D = 200 / week x 52 weeks = 10400 units

    Cost to place an order = Co = $2

    Weekly inventory carrying cost = I = $0.01

    Weekly demand = d = 200 units

    Weekly production rate = p = 500

    Optimal EPQ quantity = Square root (2 x D x C/I x (p/p-d))

    = Square root (2 x 10400 x 2/0.01x (500 / 500 - 200)

    = Square root (2 x 10400 x 200 x 500/300)

    = 2633.12 (2633 rounded to nearest whole number)
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Home » Business » The weekly demand is 200 units. The cost to place an order is $2.00, and the time from ordering to receipt is four weeks. The weekly inventory carrying cost is $0.01 per unit. Suppose that the weekly production rate is 500 units.
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