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a video duplication service uses 25000 dvds per year. it cost $50 to order and carrying...

a video duplication service uses 25000 dvds per year. it cost $50 to order and carrying costs are $0.10 per dvd on an annual basis. determine the order quantity that will minimize the total cost of ordering and holding dvds

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Answer #1

Ordering costs and holding costs are minimized at the economic order quantity

Annual Demand = D = 25000/year

Ordering Cost = Co = $50

Holding Cost = Cc = $0.10/year

Economic Order Quantity Q* = √(2DCo/Cc) = √(2*25000*50/0.10) = 5000

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