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Semmy [17]
2 years ago
5

ESD wants to determine the best order size for 2x4x6 pressure treated pine lumber required for making custom cabinets. ESD's est

imated annual demand, ordering cost and carrying cost are provided below. Round your answer to the nearest whole number. Annual Demand: 6,750 boards Cost per Order: $225 Carrying Cost: $4.25
Business
1 answer:
Vedmedyk [2.9K]2 years ago
6 0

Answer:

the economic order quantity is 845 units

Explanation:

The computation of the economic order quantity is shown below;

As we know that

Economic order quantity is

= √2 × √annual demand × √ordering cost ÷ √carrying cost

= (√2 × √6750 × √$225) ÷ (√4.25)

= √3,037,500 ÷ √4.25

= √7,14,705.88

= 845 units

Hence, the economic order quantity is 845 units

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Net cash flows from financing = Money borrowed from bank - Interest paid - dividends paid - Stock repurchase

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