Title
Operations Management - Inventory Management : Calculating EOQ - Example 1Creator
Bonnie Simmons and Memorial University. Centre for Innovation in Teaching and Learning (CITL)Description
Inventory is the stock of items kept to meet future demand, such as materials for production and products for sale. Decisions related to inventory management include how many units to order and when to order. EOQ (Economic Order Quantity) model for an item will minimize the sum of annual costs of holding and ordering inventory. This video demonstrates how to calculate the EOQ answering the following questions regarding the example:
An office supply store sells memory sticks at a fairly constant rate of 6,000 per year. The accounting dept. states that it costs $8 to place an order and annual holding cost are 20% of the purchase price $3 per unit. It takes 4 days to receive an order. Assuming a 300-day year, find:
a. Optimal order size
b. Annual ordering cost and annual holding cost
c. Number of orders per year and the time between the orders
d. Demand per day and ROP
Learning Design
Calculate the EOQ for the scenario given.Date Created
2017Format
Video/mp4Duration
08:11 minutes/seconds