Order for the auto parts shop is $80; the holding cost of carrying 1 unit is $1.2 per year. The shop has 360 working days per year. The lead time is usually 12 working days. Determine the total carrying cost.

Total carrying cost is $240.

Explanation:

EOQ=√(2*D*Co)/Cn

EOQ= 400 units

Annual carrying cost= (EOQ/2)*Cn

=(400/2)*1.20

=$240

Question:

The question is incomplete. See the complete question and the answer below:

An auto parts shop carries an oil filter for trucks. The annual demand for the oil filter is roughly 1200 units. The ordering cost per order for the auto parts shop is $80; the holding cost of carrying 1 unit is $1.2 per year. The shop has 360 working days per year The lead time is usually 12 working days.

Determine the total carrying cost.

Total carrying  cost =$240

Explanation:

Given Data;

Annual demand (D) = 1200

Ordering cost (w) = $80

Per unit cost (cn) = $1.2

calculating the economic order quantity (EOQ) using the formula;

EOQ = √[(2Dw)/cn]

Where D = annual demand

w = ordering cost

cn = per unit cost

Substituting into the formula, we have

EOQ = √[(2*1200*80)/1.2]

EOQ = √(192,000/1.2)

         = √160000

         = 400 units

Number of orders = 1200/400

                              = 3 orders

Therefore,

Total carrying  cost = number of order * ordering cost

                                 = 3 * $80

                                  = $240

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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