Question

Southeastern bell stocks a certain switch connector at its central warehouse for supplying field service offices. the yearly demand for these connectors is 14 comma 400 units. southeastern estimates its annual holding cost for this item to be ​$23 per unit. the cost to place and process an order from the supplier is ​$77. the company operates 300 days per​ year, and the lead time to receive an order from the supplier is 2 working days. ​a) what is the economic order​ quantity? nothing units ​(round your response to the nearest whole​ number).

Answer 1

Economic order quantity (EOQ) is the perfect request amount an organization should buy for its stock given a set cost of creation, request rate and different factors.

This is how we calculate this;

Economic order quantity = square root ( 2*demand *fixed cost / holding cost)

demand = 14,400

fixed cost = $77

holding cost = $23

=√ ( (2×14,400) (77 / 23))

= √ (2880)(3.348)

= √(96422.4)

=310.5 = 310 units