Answer:
if Andre orders 500 boxes at a time his anual inventory cost with holding cost included should be $150,030.
Explanation:
Answer:
Times to order: 10 times
Lot size to order: 70 calculators per order
Explanation:
Economic Order Quantity is the quantity that minimizes inventory relevant cost-holding cost and ordering cost.
So the number of times to order per year in order to minimize inventory costs can be obtained by using Economic Order Quantity (EOQ) formula:
EOQ= [tex]\sqrt{2OD}/H[/tex]
O= ordering cost per order, D = Annual demand and H= holding cost (storage cost)
EOQ = [tex]\sqrt{2*7*700}/2[/tex]
EOQ= [tex]\sqrt{9800}/2[/tex]
EOQ= [tex]\sqrt{4900}[/tex].
EOQ= 70 units.
So the number of times to order per year to minimize inventory cost is given by dividing annual demand by economic order quantity :
Annual demand (D)
= _____________
EOQ
700
= ___
70
= 10 times.
