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Anna35 [415]
3 years ago
13

Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 14,000. The annual holding cost per unit is

$3.75, and the cost to place an order is $65.
a. What is the economic order quantity? The EOQ is 697 . Enter your response rounded to the nearest whole number)
b. Suppose demand for TricoFlexers doubles, to 28,000.
Business
1 answer:
AleksAgata [21]3 years ago
4 0

Answer:

a)

economic order quantity (EOQ) = √(2SD/H)

  • S = order cost = 65
  • D = annual demand = 14,000
  • H = holding cost = 3.75

EOQ = √[2 x 65 x 14,000) / 3.75] = 696.66 ≈ 697 units

b)

if demand increases to 28,000, then:

EOQ = √[2 x 65 x 28,000) / 3.75] = 985.22 ≈ 985 units

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