Question No.5: An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1200 batteries. The supplier pays 28 R.O for each battery and estimates that the annual holding cost is 30% of the battery's value. It costs approximately 20 R.O to place an order. The supplier currently orders 100 batteries per month. a.Determine the EOQ. b. How many orders will be placed per year using the EOQ? c. Determine the total cost for the current order quantity. d. Determine the total inventory cost for the EOQ, How has ordering cost changed?
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- Annual demand (D) = 1200 batteries - Cost per battery (C) = 28 R.O - Holding cost rate = 30% of the battery's value - Holding cost per battery per year (H) = 0.30 * 28 = 8.4 R.O - Ordering cost per order (S) = 20 R.O Show more…
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