Help With Inventory & Management Control?

2. William Seville’s computer training school in Richmond, stocks workbooks with the following characteristics.
Annual demand D = 19,500 books / year
Cost of placing an order S = $25 per order
Cost of holding a book in inventory = $4 per unit per year
(a) Calculate the economic order quantity (EOQ)
(b) What are the annual holding costs for the workbooks?
(c) What are the annual ordering costs?
3. (EOQ with quantity discounts) –
M.P. VanOyen Manufacturing has gone out on a bid for a regular component. Expected demand is700 units per month (not per year). The item can be purchased from either Allen Manufacturing or Baker Manufacturing. The price lists are shown below in the table. Ordering cost is $50 per order, and annual holding cost per unit is $5.
Allen Manufacturing
Quantity Price / Unit
1 – 499 $ 16.00
500 – 999 $15.50
1,000 plus $15.00
Baker Manufacturing
Quantity Price
1 – 399 $ 16.10
400 – 799 $ 15.60
800 plus $ 15.10
(a) What is the economic order quantity?
(b) Which supplier (Allen or Baker) should be used and why?

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