Leaky Pipe Inc. Daily demand = 600 Work 50 weeks a year. 300 days a year Order Cost $10 a year. Holding Cost per year $1 What's the Time Between Orders Group of answer choices Between 7.0 to 7.5 days Between 7.5 to 8.0 days Between 8.0 to 8.5 days Between 6.5 to 7.0 days None of the above

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Patricky

Business

6 January, 18:17

Leaky Pipe Inc. Daily demand = 600 Work 50 weeks a year. 300 days a year Order Cost $10 a year. Holding Cost per year $1 What's the Time Between Orders Group of answer choices Between 7.0 to 7.5 days Between 7.5 to 8.0 days Between 8.0 to 8.5 days Between 6.5 to 7.0 days None of the above

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Mckenzie Newman · Answer 1

None of the above

Explanation:

optimal time between orders = working days / expected number of orders

working days = 300 expected number of orders = ?

expected number of orders = D / EOQ

Q = EOQ = ? D = annual demand = daily demand x working days = 600 x 300 = 180,000

so we must first find economic order quantity (EOQ) = √ (2DS / H)

D = 180,000 S = order cost = $10 H = holding cost = $1 per year

EOQ = √ (2DS / H) = √ (2 x 180,000 x $10 / $1) = √360,000 = 1,897.36 ≈ 1,897 units

N = D / EOQ = 180,000 / 1,897 = 94.89 orders per year

optimal time between orders = working days / expected number of orders = 300 working days / 94.89 order = 3.16 days