Answer
Economic order quantity will be 447.21
Explanation:
We have given monthly demand = 10000 units
We know that 1 year = 12 month
So Annual demand (D) = monthly demand × 12 months = 10000 × 12 = 120000 units
Cost of transistor = $5 per unit
Monthly Holding cost = 10% of cost = 10% of $5 = $0.50
So annual holding cost (H) = monthly holding cost × 12 = $0.50 × 12 = $6
Setup cost(S) = $5
We know that economic order quantity is given by
Economic order quantity =