Oscar Wright
New member
- Joined
- Sep 10, 2006
- Messages
- 2
Hi Gang
Having trouble with this word problem involving inventory. Here goes:
The General Chemical Company uses 150,000 gallons of hydrocloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical's economic order quantity is......??
I tried the following logic pattern, but couldn't come up with the right answer:
S = usage in units per period
0 = Order cost per order
C = carrying cost per unit per period
Q = order quantity in units.
Order cost = 0 x S/Q
Carrying cost = C x Q/2
Total Cost = (0 x S/Q) + (C x Q/2)
E0Q = (within sqare roots symbol) 2xSx0
_____
(divided by) C
1. Multiply both sides by Q
2. Multiply both sides by 2
3. Multiply both sides by C
4. Take the square root of both sides
(within square root symbol) 2xSxO
divided by C = Q=E0Q
Any help will be greatly appreciated
Liana
Having trouble with this word problem involving inventory. Here goes:
The General Chemical Company uses 150,000 gallons of hydrocloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical's economic order quantity is......??
I tried the following logic pattern, but couldn't come up with the right answer:
S = usage in units per period
0 = Order cost per order
C = carrying cost per unit per period
Q = order quantity in units.
Order cost = 0 x S/Q
Carrying cost = C x Q/2
Total Cost = (0 x S/Q) + (C x Q/2)
E0Q = (within sqare roots symbol) 2xSx0
_____
(divided by) C
1. Multiply both sides by Q
2. Multiply both sides by 2
3. Multiply both sides by C
4. Take the square root of both sides
(within square root symbol) 2xSxO
divided by C = Q=E0Q
Any help will be greatly appreciated
Liana
