(Answered) Question the weekly demand for an item is 50 units it is

Management Studies

Question: The weekly demand for an item is 50 units. It is known that the holding cost per year is 20 percent of the unit price. A cost of RM40 will be charged on placing each order. That particular item costs the company RM150 per unit. Owning to high demand, the company's customers do not object to backordering and the backordering cost is RM5 per year. This company operates for 50 weeks a year.

(a) Calculate the Economic Order Quantity.

(b) Determine the maximum quantity of backorder.

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