A Firm That Makes Electronic Circuits Has Been Ordering a Certain

question 12

Essay

A firm that makes electronic circuits has been ordering a certain raw material 250 ounces at a time. The firm estimates that carrying cost is 30% per year, and that ordering cost is about $20 per order. The current price of the ingredient is $200 per ounce. The assumptions of the basic EOQ model are thought to apply. For what value of annual demand is their action optimal?

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Definitions:

Threshold

The minimum level of stimulus intensity required for a stimulus to be detected or for a response to occur.

Endorphins

Neurotransmitters produced in the brain that act as natural painkillers and also improve mood, often released in response to stress or exercise.

Norepinephrine

A neurotransmitter and hormone involved in arousal, alertness, and the regulation of blood pressure.

Dopamine

A neurotransmitter involved in many functions, including motivation, reward, reinforcement, and motor control.