Problem
Lowe's sells a certain style of battery weed eaters. They sell 40 per month. The weed eaters are purchased for $80 each and the annual carrying costs per unit are estimated to be 30% of purchase price. Ordering costs are $ 25 per order.
Note: Given monthly Demand. Need to calculate Annual Demand. Need to calculate carrying cost per item. Stated as a percentage of purchase price.
EOQ = Sq Rt 2DS /H
TC = Q/2 x H + D/Q x S
i. What is the EOQ (Carry out 2 decimal pts)
ii. What is Total Cost using EOQ?
iii. If the buyer orders 50 weed eaters on every order, what is the impact on Total Cost vs EOQ Total Cost?