Questions
- What is the economic order quantity for BBE in units? In Pounds?
- What is the total cost ( not considering transportation related costs) of the EOQ?
- What is the total cost for using motor carrier transportation?
- What is the total cost for using motor carrier transportation?
- Which alternative should BBE use?
Answer 1:
Annual Demand/Order Quantity (Q) = 5000 cases
Cost per Unit (CU) -- $200
Cost per Order (CO) ---$100
Carrying Cost (CC) % (as % of CU)—0.28
So EOQ = SQRT((2Q* CO)/(CU*CC%))= SQRT((2*5000*100)/(.28*200))=SQRT(10000000/56)
= 133.6 ...