Problem: An automobile manufacturer uses about 60,000 pairs of bumpers (front bumper and rear bumper) per year, which it orders from a supplier. The bumpers are used at a reasonably steady rate during the 240 working days per year. It costs $3.00 to keep one pair of bumpers in inventory for one month, and it costs $25.00 to place an order. A pair of bumpers costs $150.00.
- Write the annual carrying cost function.
- Write the annual ordering cost function.
- Write the annual total cost function.
- What is the EOQ?
- What is the total annual expense of ordering the EOQ every time?