Homework Answers
Units required for 3 months = 12,500
Hence, annual demand for 12 months= 12,500 x 4 = 50,000 units.
Ordering cost = $20
Holding cost= $15 x 10% = $1.50
Formula of Economic Order Quantity (EOQ) =√ (2 x Annual Demand x Ordering cost) / holding cost
Therefore, substituting,
Economic order quantity (EOQ) = √(2 x 50000 x $20)/$1.5 = 1154.70 units approx 1155 units.
1000000000000000000000000
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