Answer:
In order to minimize cost the outlet must order 60 units 15 times a year.
Explanation:
Theoretically, the EOQ is the optimal order quantity that a firm should purchase in order to minimize its inventory costs (holding costs are included here), and costs of placing an order.
Mathematically:
EOQ=
Where:
D= demand
S= cost of placing an order.
H= holding cost (per unit and per year).
In the statement, we identify each of these values:
D= 900
S= 4
H= $2
EOQ= =√2*4*900/2= 60
Times per year= 900/60= 15