Amazon sells 7,000 Lenovo PCs every month. Each PC costs $500 and Amazon has a holding cost of 20 percent. For what fixed cost per order would an order size of 7,000 units be optimal? Round your answer to two (2) decimal places.
Expert Answer
EOQ model:
The optimal order quantity is given by formula:
Qo=√(2AS/I*C)
Apply goal seek to obtain cost per order
Step 1:
Prepare Following table in excel:
Formulas used in excel:
Step 2:
Goal Seek Formulation:
For Q = 2,500 units
Fill the tabs as shown below:
Press ok.
Step 3:
Following solution is obtained:
For Q = 2,500 units, Fixed order cost = $2,604
For Q = 10,000 units
Goal
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