Question

company uses 1450 rolls of masking tape annually. It costs the company $15 to order and receive this product. The masking tape costs $3.42 per roll. The company uses a factor of 16% of the purchase price to determine the annual holding cost for this product. What is the Economic Order Quantity (EOQ)? 79,495 rolls 281.9 rolls 61 rolls 381.2 rolls 2.7 rolls

Answer 1

Answer:

281.9 rolls

Explanation:

Demand = D = 1450 rolls

Ordering cost = S = $15 per order

Holding cost = H = $3.42 x 16% = 0.5472 per unit per year

Economic order Quantity = $\sqrt{\frac{2DS}{H}$

Economic order Quantity = $\sqrt{\frac{2 (1450) (15) }{0.5472}$

Economic order Quantity = $\sqrt{\frac{ 43500 }{0.5472}$

Economic order Quantity = $\sqrt{{ 79495.61}$

Economic order Quantity = 281.9 units

The Economic order quantity of the company is 281.9 units