Question

a company makes bicycles. it produces 450 bicycles a month. it buys the tires for bicycles from a supplier at a cost $20per tire. the company inventory carrying cost is estimated to be 15 percent of cost and the ordering is $50per order.
a) calculate the EOQ
b) what is the number of order per year ​

Answer 1

Answer:

B) what is the number of order per year

Answer 2

Answer:

Explanation:

a.

Given A company produces in 1 month 450 bicycles

So in 12 months we get 450 x 12 = 5400 bicycles

So for 1 bicycle there are 2 tyres

  So 5400 bicycles we get 5400 x 2 = 10,800 tyres.

So the cost of per order is $ 50

So the carrying cost will be 15% of $ 20

                                         = 15/100 x 20

                                         = $ 3 for one unit one year.

Economic order quantity = √ 2 x 10,800 x 50 / 3

                                       = √3,60,000

                                  = 600 tyres.