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John Moffat.
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- December 7, 2021 at 7:34 am #642864
Ts Co has daily demand for ball bearings 40 a day for each of the 250 working days(50 weeks) of the year.
Purchase price =$2
Cost of placing an order = $64
Holding costs= 25% of purchase price.I do know how to calculate EOQ, but info given about the annual demand was confusing.
Annual demand = 40 × 250 working days =10,000 units
or
Annual demand = 40 × 50 weeks × 7 days =14,000 unitsBecause 250 days = 35.7 or 36 weeks
And 50 weeks = 350 days.The answer in the kit was 10,000 units (i.e. 250 days in a year)
I guess it is printing mistake but had a doubt if such questions were to be asked in the exam, what to do then?December 7, 2021 at 9:26 am #642891There is no printing mistake because the wording is clear as it stands.
The first line says that there are 250 working days and that the demand is 40 a day for each of those working days.
So the total demand is 40 x 250.
(They are obviously only working for 5 days a week(
December 8, 2021 at 3:56 am #643021But what about the 50 weeks mentioned in bracket, should we ignore that?
December 8, 2021 at 7:25 am #643056It is irrelevant because they are not working seven days a week – the question specifically says that they work 250 days a year and that the demand is 40 per day for days that are worked.
(Do you work 7 days a week? 🙂 )
December 8, 2021 at 8:21 am #643071Okay, got it now!
December 8, 2021 at 3:00 pm #643147You are welcome 🙂
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