Question

Matthew​ Liotine's Dream Store sells water beds and assorted supplies. His​ best-selling bed has an annual demand of 395 units. Ordering cost is ​$38​; holding cost is ​$5 per unit per year. ​a) To minimize the total​ cost, how many units should be ordered each time an order is​ placed? EOQ​ = nothing units ​(round your response to the nearest whole​ number).

Answer 1

Answer:

77.48 units

Explanation:

Data provided in the questions

Annual demand = 395 units

Ordering cost = $38

Holding cost per unit per year = $5

The computation of the economic order quantity is shown below:

$= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

$= \sqrt{\frac{2\times \text{395}\times \text{\ 38}}{\text{\ 5}}}$

= 77.48 units

hence, the economic order quantity is 77.48 units

We simply applied the above formula so that approximate units could come. And it always expressed in units