Annual Demand = 2000

Ordering Cost = $ 500

Purchase Cost = $ 50 per unit
F = 25% per year
Selling Price = $ 95 per unit

EOQ /Q* = 400 Ordering Frequency = 5

Ordering Interval = 0.2 year
= 2.4 months

Q Holding Cost Otdering Cost TRC TC

100 $ 625 $ 10,000 $ 10,625 $ 110,625
200 $ 1,250 $ 5,000 $ 6,250 $ 106,250
300 $ 1,875 $ 3,333 $ 5,208 $ 105,208
400 $ 2,500 $ 2,500 $ 5,000 $ 105,000
500 $ 3,125 $ 2,000 $ 5,125 $ 105,125
600 $ 3,750 $ 1,667 $ 5,417 $ 105,417
700 $ 4,375 $ 1,429 $ 5,804 $ 105,804
800 $ 5,000 $ 1,250 $ 6,250 $ 106,250

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$-
100 200 300 400 500 600 700 800

Holding Cost Otdering Cost TRC

Sensitivity Analysis
With Respect to Q (lot size)
Q Holding Cost Otdering Cost TRC TC Q/Q* TRC'/TRC*
50 $ 313 $ 20,000 $ 20,313 $ 120,313 0.125 4.0625
100 $ 625 $ 10,000 $ 10,625 $ 110,625 0.25 2.125
200 $ 1,250 $ 5,000 $ 6,250 $ 106,250 0.5 1.25 125%
400 $ 2,500 $ 2,500 $ 5,000 $ 105,000 1 1
500 $ 3,125 $ 2,000 $ 5,125 $ 105,125 1.25 1.025
 800 $ 5,000 $ 1,250 $ 6,250 $ 106,250 2 1.25
1000 $ 6,250 $ 1,000 $ 7,250 $ 107,250 2.5 1.45
2000 $ 12,500 $ 500 $ 13,000 $ 113,000 5 2.6

EOQ SENSITIVITY WITH RESPECT TO Q

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
0.125 0.25 0.5 1 1.25 2 2.5 5

TRC'/TRC*

With Respect to Actual Annual Demand (D)

Actual Otdering
Demand Q' Holding Cost Cost TRC TC Q'/Q* DA/DF √DA/DF
200 126.491 $ 790.57 $ 790.57 $ 1,581 $ 11,581 0.316 0.1 0.316
500 200.000 $ 1,250.00 $ 1,250.00 $ 2,500 $ 27,500 0.500 0.25 0.500
1000 282.843 $ 1,767.77 $ 1,767.77 $ 3,536 $ 53,536 0.707 0.5 0.707
1500 346.410 $ 2,165.06 $ 2,165.06 $ 4,330 $ 79,330 0.866 0.75 0.866
2000 400.000 $ 2,500.00 $ 2,500.00 $ 5,000 $ 105,000 1.000 1 1.000
2500 447.214 $ 2,795.08 $ 2,795.08 $ 5,590 $ 130,590 1.118 1.25 1.118
3000 489.898 $ 3,061.86 $ 3,061.86 $ 6,124 $ 156,124 1.225 1.5 1.225
3500 529.150 $ 3,307.19 $ 3,307.19 $ 6,614 $ 181,614 1.323 1.75 1.323
4000 565.685 $ 3,535.53 $ 3,535.53 $ 7,071 $ 207,071 1.414 2 1.414
TC'/TC*
1.739
1.250
1.061
1.010
1.000
1.006
1.021
1.039
1.061