Respuesta :
Answer:
Calculation of economic order quantity (EOQ):
The formula to calculate economic order quantity is,
EOQ = [tex]\sqrt{\frac{2DC_{S} }{C_{H} } }[/tex]
Where,
D is the annual demand
Cs is the setup cost
CH is the holding cost
Substitute $15,600 for D, $400 for Cs and $5 for CH in the above formula.
EOQ = [tex]\sqrt{\frac{2 * 15600 * 400}{5} }[/tex]
EOQ = $1580
Hence, the economic order quantity is 1,580.
(a). Calculation of total setup cost:
The formula to calculate total setup cost is,
Total setup cost = (D/EOQ) x [tex]C_{S}[/tex]
Substitute 15600 for D, $400 for [tex]C_{S}[/tex] and 1580 for EOQ in the above formula
Total setup cost = (15600/1580) x $400
Total setup cost = $3,949.36
Hence, the total setup cost is $3,949.36
(b). Calculation of total holding cost:
The formula to calculate total holding cost is,
Total holding cost = (D/2) x [tex]C_{H}[/tex]
Substitute 15600 for D and $5 for [tex]C_{H}[/tex] in the above formula
Total holding cost = (15,600/2) x 5
Total holding cost = $3,900
Hence, total holding cost is $3,900
(c). Calculation of total cost:
The formula to calculate total cost is,
Total cost = D x C + [tex]C_{TS}[/tex] + [tex]C_{TH}[/tex]
Where,
D is the annual demand
C is the cost
[tex]C_{TS}[/tex] is the total setup cost
[tex]C_{TH}[/tex] is the total holding cost
Substitute 15600 for D, $50 for C, 3949.37 for [tex]C_{TS}[/tex] and $3,950 for [tex]C_{TH}[/tex] the above formula,
Total cost = (15,600 x $50) + $3,949.37 + $3,950
Total cost = $787,899.37
Hence, total cost of order is $787,899.37
