A computer company has annual demand of 20,000. They want to determine EOQ for circuit boards which have an annual holding cost (H) of $10/unit, and an ordering cost (S) of $75. The purchasing lead time is 5 days. What is the TC and reorder point ( R) ?
A) 300 units, $3,000
B) 400 units, $5,477
C) 200 units, $2,000
D) 350 units, $5, 277
E) 400 units, $5,350

Question

Quizplus · Accepted Answer

11ea8e10_ac39_043f_8f12_19daddc5af6d_TB5472_00 R = 20,000 / 250 days x 5 days = 400 units
TC = (20,000/548 x $75) + (548 / 2 x $10) = $ 2,737 + $ 2,740 = $ 5,477

A Computer Company Has Annual Demand of 20,000