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If the annual demand for a product is 200,000 units, then the annual carrying cost rate is 30 percent of the cost of the unit, the product costs $37.50 per unit to purchase, and each time the product is ordered the related ordering cost is $96.00.

a. What is the EOQ (Economic Order Quantity)?

b. What is the TSC (Total Annual Stocking Cost) at the EOQ?

c. How much would the TSC increase if the order quantity must be 2,500 units because of a standard shipping-container size?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91628818

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