00:01
Hello everyone, for the first bit to find the order quantity that minimizes the total annual ordering and holding cost we can use the formula that is economic order quantity.
00:14
Economic order quantity equal to 2sd by h.
00:30
Here s is the annual demand, d is the ordering cost per order and h is the holding cost per package per year.
01:03
Here the values in this given questions are s equal to 20 packages per day into 500 seats per package into 290 days per year that is 2 ,000, 2 ,29 ,000 seats per year per year and d equal to 11 dollar and h equal to 1 dollar.
02:05
Plugging these values we get eoq that is economic order quantity equal to root over 2 into 29 lakh into 11 by 1 which is equal to equivalent is it will be nearly 17 ,131.
02:31
Therefore, the order quantity that would minimize total annual ordering therefore the order quantity that would minimize the total annual ordering and holding cost is approximately 17 ,131 packages.
02:59
Moving forward to the next bit we have to calculate the total annual inventory control cost using the order quantity from part a we have the formula tc equal to q by 2 h plus s by q into d.
03:23
Q is the order quantity and s is the annual demand and d is the ordering cost per cost per order and h is the holding cost per order per order per year...