optimal ordering quantities
ahodgyo13
OptimalOrderQuantitySupplierA.docxOptimal Order Quantity – Supplier A
Q= √2KD
H
K=Units of annual demand
D = Set cost per order
H = Carry Cost per order
|
Units |
50,000 (50 weeks * 1000 units per week) |
|
Setup costs |
$20 per order |
|
Inventory carrying cost |
0.25 per order |
|
Equation used with all above values filled in |
√(2 × 50,000 × 20 / 0.25)=2828.43 |
|
Optimal order quantity of springs |
2,828 |
Optimal Order Quantity – Supplier B
Q= √2KD
H
K=Units of annual demand
D = Set cost per order
H = Carry Cost per order
|
Units |
50,000 (50 weeks * 1000 units per week) |
|
Setup costs |
$10 per order |
|
Inventory carrying cost |
0.50 per order |
|
Equation used with all above values filled in |
√(2 × 50,000 × 10 / 0.50)= 1,414.21 |
|
Optimal order quantity of springs |
1,414 |
