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4 August, 09:18

Annual demand of a part is 4,153 items. Inventory holding cost is $28 per item per year and ordering cost is $166 per item. If the EOQ scheme is followed to order this part, calculate the annual number of orders to be plac

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  1. 4 August, 12:33
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    222

    Explanation:

    Economic Order Quantity = √[ (2XCₒXD) / Cₕ]

    Where:

    Cₕ = cost of holding a unit of inventory for a year

    Cₒ = cost of placing an order

    D = annual demand

    Ordering cost, Cₒ = $166

    Annual demand, D = 4,153

    Inventory holding cost, per item per year, Cₕ = $28

    Economic Order Quantity = √[ (2X166X4153) / 28]

    =√[1378796/28]

    =√49242.71

    =221.9

    =222

    The Annual Number of Orders to be placed is 222.
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