To find the solution, we need to use the Economic Order Quantity (EOQ) formula. The formula is given as follows:
EOQ = √((2 * D * S) / H)
Where:
D = Annual demand for the product (in units)
S = Ordering cost per order
H = Holding cost per unit per year
In this case, we are given:
Annual demand (D) = 800 units
Unit price = #0.02
Ordering cost (S) = #
Holding cost (H) = 10% of the unit price = 0.10 * 0.02 = #0.002
Now, let's substitute these values into the formula to find the solutions:
I) EOQ in units:
EOQ = √((2 * 800 * #) / #0.002)
EOQ = √((1600 * #) / #0.002)
EOQ = √(800,000 / 0.002)
EOQ = √(4,000,000,000)
EOQ ≈ 63,246 units
Therefore, the Economic Order Quantity (EOQ) is approximately 63,246 units.
II) Total variable cost:
Total variable cost is the sum of ordering cost and holding cost.
Ordering cost = S * (D / EOQ)
Ordering cost = # * (800 / 63,246)
Holding cost = H * (EOQ / 2)
Holding cost = #0.002 * (63,246 / 2)
Total variable cost = Ordering cost + Holding cost
Substitute the values and calculate.
III) Number of orders per annum:
Number of orders per annum is the annual demand divided by the Economic Order Quantity (EOQ).
Number of orders per annum = D / EOQ
Number of orders per annum = 800 / 63,246
Use the calculator to perform the calculation.
Please note that the "#" symbol in the question represents missing values. You need to provide the actual values for ordering cost and holding cost in order to calculate the total variable cost and number of orders per annum accurately.