Scenario 9.3
Tom Bergman,owner and operator of the Earplug Superstore,is reviewing the costs associated with the store's best-selling hearing aid,the BZ15.The data available to Mr.Bergman concerning this device follow.
Demand = 25 units/week
Order cost = $3/order
Holding cos = $1.50/unit/year
The Earplug Superstore operates 52 weeks a year.
-Use the information in Scenario 9.3.If Tom orders such that his annual holding cost is twice what his annual ordering cost is,how many units at a time is he ordering?

Question

Quizplus · Accepted Answer

The EOQ formula is:EOQ = sqrt((2*D*O)/H)where:D = demandO = order costH = holding costIn this case, we have:D = 25 units/week * 52 weeks/year = 1300 units/yearO = $3/orderH = $1.50/unit/yearPlugging these values into the EOQ formula, we get:EOQ = sqrt((2*1300*$3)/$1.50) = 104.88 unitsSince we can't order a fraction of a unit, we would round up to 105 units.

Scenario 9.3 Tom Bergman,owner and Operator of the Earplug Superstore,is Reviewing the Reviewing