Answer:
total inventory cost = $1500
total inventory cost = $1230
total inventory cost = $1200
total inventory cost = $1220
total inventory cost = $1500
economic order quantity = 50
Explanation:
given data
uses spare part = 1,200
cost = $25
annual holding cost = $24
to find out
Calculate the total cost for order sizes of 25, 40, 50, 60, and 100 and economic order quantity
solution
we get here total cost of order size as
total inventory cost = C × 0.5Q + F ×
here C is cost per unit and Q is order quantity and F is fixed cost and D is demand per year
so now we put first for 25 size
total inventory cost = C × 0.5Q + F ×
total inventory cost = 24 × 0.5× 25 + 25 ×
total inventory cost = $1500
and
now for order 40
total inventory cost = 24 × 0.5× 40 + 25 ×
total inventory cost = $1230
and
now for order 50
total inventory cost = 24 × 0.5× 50 + 25 ×
total inventory cost = $1200
and
now for order 60
total inventory cost = 24 × 0.5× 60 + 25 ×
total inventory cost = $1220
and
now order size 100
total inventory cost = 24 × 0.5× 100 + 25 ×
total inventory cost = $1500
and
now we find economic order quantity that is
economic order quantity =
economic order quantity =
economic order quantity = 50
