Answer: Please find answers below
Explanation:
(a) Economic order quantity EOQ = [tex]\sqrt{2 X Annual Demand X Ordering Cost) / Carrying Cost)}[/tex]
= [tex]\sqrt{2 X 5,900 X 29 / 9 }[/tex] Â Â = [tex]\sqrt{38,022.222}[/tex]
= 194.99 units Â
(b) Average number of units = Economic order quantity / 2
= 194.99 / 2 Â
= 97.496 units  Â
(c) Optimal number of orders = Annual Demand / Economic order quantity
= 5,900units / 194.99 units  =30.26 Â
(d) Optimal number of days between two orders = Number of working days / Optimal number of orders
= 250 days / 30.26 Â
= 8.26 Â
Total ordering cost = Cost per order X Number of orders
= $29 X 30.26 Â
= $ 877.54
Total holding cost = Average inventory X carrying cost per unit
= 194.99 /2 Â X $9 Â
= $877.455
(e) Annual cost of ordering and holding inventorY =Total ordering cost + Total carrying cost
= $ 877.54 Â + $877.455
= $ 1,754.995  ≈ $1,755 Â
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(f) Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 5900 units at $102 per unit  Â
= $ 877.54  + $877.455  + (5,900 x 102) = $1754.995 +601,800= $603,554.995≈$603,555
Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 6000 units at $102 per unit  Â
= $ 877.54  + $877.455  + (6000 x 102) = $1754.995 +612,000= $613,754.995≈$613,755
