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Economic Order Quantity (EOQ) is a method used to calculate the ideal quantity to order. The underlying concepts of EOQ is the balance between ordering cost and holding cost. Q1. Using the data points given below, perform two calculations:  Q2. Use an excel file to calculate the EOQ order. Make sure to use the formula bar to create the EQO formula. Make an excel file similar to the image attached. A = annual demand = 20,000 Cp = Cost of an order which includes preparing and following up the order = $100.00  Ch = Unit inventory cost per year or item cost (P) $100 times annual carrying cost rate (r) (25%)

Economic Order Quantity (EOQ) is a method used to calculate the ideal quantity to order. The underlying concepts of EOQ is the balance between ordering cost and holding cost. Q1. Using the data points given below, perform two calculations:  Q2. Use an excel file to calculate the EOQ order. Make sure to use the formula bar to create the EQO formula. Make an excel file similar to the image attached. A = annual demand = 20,000 Cp = Cost of an order which includes preparing and following up the order = $100.00  Ch = Unit inventory cost per year or item cost (P) $100 times annual carrying cost rate (r) (25%)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Economic Order Quantity (EOQ) is a method used to calculate the ideal quantity to order. The underlying concepts of EOQ is the balance between ordering cost and holding cost.

Q1. Using the data points given below, perform two calculations: 

Q2. Use an excel file to calculate the EOQ order. Make sure to use the formula bar to create the EQO formula. Make an excel file similar to the image attached.

A = annual demand = 20,000

Cp = Cost of an order which includes preparing and following up the order = $100.00 

Ch = Unit inventory cost per year or item cost (P) $100 times annual carrying cost rate (r) (25%)

B12 1 2 Annual Demand 3 Order Cost 4 Unit Cost 5 Carrying Cost % 789123 10 11 12 EOQ X✓ fx =SQRT((2*B2*B3)/(B4*B5)) I Formula Bar A B 14 15 EOQ (units) 16 17 18 Formula Formula Formula 10,000 50.00 10.00 0.40 Order Quantity (units) B6*C9 SQRT((2*B2*B3)/(B4*B5)) 60 500.00 SQRT((2*B2*B3)/(B4*B5)) 500.00 с # Cases per order B15/B6 4 33.3 D EOQ Formula 2 x (annual usage) x (ordering costs) (unit cost $) x (Carrying cost %) Annual Ordering Cost D9*B3 $8,333.33 Orders per year B2/B9 166.67 B2/B15 20.00 E F D15*B3 $1,000.00 Annual ICC (B9/2)*(B4*B5) $120.00 (B15/2)*(B4*B5) $1,000.00 G Annual Total Cost E9+F9 $8,453.33 E15+F15 $2,000.00 H
Transcribed Image Text:B12 1 2 Annual Demand 3 Order Cost 4 Unit Cost 5 Carrying Cost % 789123 10 11 12 EOQ X✓ fx =SQRT((2*B2*B3)/(B4*B5)) I Formula Bar A B 14 15 EOQ (units) 16 17 18 Formula Formula Formula 10,000 50.00 10.00 0.40 Order Quantity (units) B6*C9 SQRT((2*B2*B3)/(B4*B5)) 60 500.00 SQRT((2*B2*B3)/(B4*B5)) 500.00 с # Cases per order B15/B6 4 33.3 D EOQ Formula 2 x (annual usage) x (ordering costs) (unit cost $) x (Carrying cost %) Annual Ordering Cost D9*B3 $8,333.33 Orders per year B2/B9 166.67 B2/B15 20.00 E F D15*B3 $1,000.00 Annual ICC (B9/2)*(B4*B5) $120.00 (B15/2)*(B4*B5) $1,000.00 G Annual Total Cost E9+F9 $8,453.33 E15+F15 $2,000.00 H
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