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Determine economic order size

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Suppose the organization in which you work expects to demand approximately 9,600 tubes of a certain size next year. Annual carrying costs are $16/tube and ordering costs are $75/order. The organization operates 300 days a year. Lead time is 3 days.

1. Determine Economic Order size (EOQ) i.e., how many tubes should be ordered at a time

2. What is the ordering cost/yr and annual carrying cost at the EOQ.

3. What is the total inventory or incremental cost at the EOQ.

4. If Purchase Price /unit is $80 then what is the TC at the EOQ

5. How many times per year does the store reorder?

6. Determine the length of an order cycle.

7. If the lead time is 3 days, what must be the reorder level

8. Determine ordering, carrying and total inventory cost, and overall TC if order of quantities are 100, 150, 200, 250,300,350 and 400 unit. What do you understand from this exercise?

Reference no: EM133363140

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