Eoq, Average Inventory

[decappo72]

Cheeseburger and Taco Company purchases 14,515 boxes of cheese each year. It costs $29 to place and ship each order and $6.68 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.

Calculate Economic Order Quantity.

[VHG]

No.

[Peter Pedant]

well the mechanism is here

https://en.wikipedia.org/wiki/Economic_order_quantity

and you need to read it and apply it

h is the annual holding cost
D is the annual demand quantity
K is fixed cost per order

all of which you have been given - plug into the formula and away you go !

If you do you working we will tell you if it is right -
I am mean you have to do SOMETHING !

[Peter Pedant]

it is quite interesting

tota; cost = purchase cost + ordring cost +holding cost

rderng cost is not linear ( hyperbolic)
and holding cost is linear

the economic quantity is the minimum of these two quantities

Q - squared is 2 x demand x cost per order / holding cost

you dont even have to change the nymbers ! ya just plug them in ¬

I get 2x29x14515 / 6.68
which is 125 000 or thereabouts and the square root is 355 - ans

first used in 1913 apparently

[fiction-factory]

It's on this fred as well, PP
http://www.theanswerbank.co.uk/Business-and-Finance/Question1477999.html

[Peter Pedant]

hardly a problem for you ( coz I can do it so it must be simple )

there seem to be quite a few functions f = a/Q + bQ
in economics
and they all have a minimum df/dQ , at Qmin = root ( b/a)
so I have learnt something .....

also for production and I read money supply
( learn once and use three times )