Question

A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. If the cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00, then the optimal order quantity (EOQ) for napkins would be:

Answer 1

Answer: 5,000 Boxes.

Explanation:

Given that,

Boxes of napkins uses each year (A) = 62,500

Cost to order napkins (B) = $200.00 per order

Annual carrying cost for one box of napkins (C) = $1.00

Optimal order quantity (EOQ) for napkins = $\sqrt{\frac{2\times A\times B}{C} }$

                                                                        =$\sqrt{\frac{2\times 62,500\times 200.00}{1.00} }$

                                                                        = 5,000 Boxes