Holding cost per item per annum = 25% x $10 = $2.50
EOQ = √2DCo
EOQ = √2 x 1,000 x $150
EOQ = 346 units
EOQ is the square root of 2 multiplied by annual demand and ordering cost per order divided by holding cost per item per annum. EOQ is the quantity of stock that is bought each time a replenishment order is placed.