Answer with explanation please and thank you Problem 2038 A

Answer with explanation please and thank you!

Problem 20-38 A particular raw material is available to a company at three different prices, depending on the size of the order: Less than 100 pounds $20 ur per per 1,000 pounds or e$18er 100 pounds to 999 pounds pound S19 P pound The cost to place an order is $40. Annual demand is 4,100 units. Holding (or carrying) cost is 25 percent of the material price. What is the economic order quantity to buy each time, and its total cost? (Round your answers to the nearest whole number.) Economic order quantity Total cost

Solution

Solution Calculation of ordering cost and Carrying cost in EOQsystem here, we assumed that EOQ will be in the bracket 100 to 999, hence we used 19 as cost EOQ= square root of (2 * annual demand*ordering cost)/carrying cost            =square root of (2*4100*40)/0.25*19              =263 Particulars amount No of Order(total annual usage / order quantity)(4100/263) 15.58935 No of order 16 ordering cost per order 40 total ordering cost 640 Carrying cost Particulars orderd stock 263 carrying cost per block (25% of cost) 1.75 Total carrying cost (ordered stock/2)*carrying cost 624.625 total carrying cost and odering cost is same at EOQ. But here just bcoz we have rounded of the nume=ber of orders, that’s why these both costs are not same