If annual demand equals 1000 units, the number of working days per year is 250, C_o=$300 per order and C_c=$3 per unit, how many days are between orders in the basic EOQ model? A) 110 B) 112 C) 117 D) 122

Question

Quizplus · Accepted Answer

First, we need to calculate the Economic Order Quantity (EOQ) with the given formula:
EOQ = √(2DCo/Cc)
where 
D = annual demand = 1000 units
Co = cost of placing an order = $300/order
Cc = carrying cost per unit = $3/unit

EOQ = √(2DCo/Cc) = √(2*1000*$300/$3) = √(2*1000*100) = 447.21 ≈ 447 units

Next, we can use the following formula to find the number of orders per year:
Number of orders = D/EOQ = 1000/447 ≈ 2.24 orders

To find the number of days between orders, we need to divide the number of working days in a year (250) by the number of orders per year:
Days between orders = Working days per year / Number of orders = 250/2.24 ≈ 111.61 ≈ 112 days

Therefore, the best choice is B, which is 112.

If Annual Demand Equals 1000 Units, the Number of Working