Methawks Corporation has the following information:
Average demand = 30 units per day
Average lead time = 40 days
Item cost = $45
Ordering cost = $50
Inventory carrying cost = 15%
The business year is 300 days.
-How many orders per year will be made?

Question

Quizplus · Accepted Answer

The number of orders per year is calculated by dividing the annual demand by the order quantity. The annual demand is the average demand per day multiplied by the number of business days in a year: 30 units/day * 300 days = 9000 units/year. The Economic Order Quantity (EOQ) formula is not needed here since the question directly asks for the number of orders per year, which is 9000 units/year divided by the order quantity. Assuming the order quantity is the same as the average demand per day, the number of orders per year is 9000/360 = 25.

Methawks Corporation Has the Following Information