Answer:
EPQ = 1982
maximum inventory = 1090
average inventory = 545
order cycles = 44.04
total cost of managing = $2180
Explanation:
given data
monthly demand = 900
annual demand = 12 × 900 = 10800
Production averages = 100 units
Holding costs = $2.00
setup cost = $200.00
company operates= 240 days
solution
daily usage =
daily usage = 45
we find here EPQ
EPQ = ×
...........1
EPQ = ×
EPQ = 1982
and
maximum inventory = × daily production - daily use
maximum inventory = × (100-45)
maximum inventory = 1090
and
average inventory =
average inventory =
average inventory = 545
and
order cycles =
order cycles =
order cycles = 44.04
and
total cost of managing =
total cost of managing =
total cost of managing = 2179.81 = $2180