Electronic Village stocks and sells a particular brand of personal computer. It costs the store $450 each time it places an order with manufacturer for the personal computers. The annual cost of carrying/holding a PC in inventory is $170 (per unit). The store manager estimates that annual demand for the PCs will be 1200 units.
a) Determine the optimal order quantity (EOQ)?
b) What is the total annual cost (ordering & carrying/holding)?
c) What is the maximum inventory level if we order the EOQ quantity?
d) How many times we will order if we use the EOQ quantity?
e) What is the total cost is we order Q=100?
How many times we will order in this case?
This question belongs to operations management and discusses about Economic Order Quantity.
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