We need 25000 units per year. Two suppliers for those units have provided us their quotes. The order cost is $300 per order and
holding cost is $30 per unit per month. a.) What is the economic order quantity
1 answer:
Answer:
EOQ = 204.124 rounded off to 204 units
Explanation:
The EOQ or economic order quantity is the optimal order quantity that a company should order every time in order to minimize the inventory related costs such as holding, ordering and shortage/stock out costs. The formula o calculate EOQ is attached.
Holding cost per unit per annum = 30 * 12 = $360
EOQ = √(2 * 25000 * 300) / 360
EOQ = 204.124 rounded off to 204 units
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