Question

Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15 comma 200 units. Southeastern estimates its annual holding cost for this item to be ​$25 per unit. The cost to place and process an order from the supplier is ​$75. The company operates 300 days per​ year, and the lead time to receive an order from the supplier is 3 working days. ​a) What is the economic order​ quantity? nothing units ​(round your response to the nearest whole​ number).

Answer 1

Answer:

The company minimize their inventory cost with orders of 302 units

Explanation:

economic order​ quantity formula:

$Q_{opt} = \sqrt{\frac{2DS}{H}}$

Where:

D = annual demand = 15,200 units

S= setup cost = ordering cost = $75

H= Holding Cost = $25

$Q_{opt} = \sqrt{\frac{2(15,200)(75)}{25}}$

EOQ = 301.9933774 = 302 units