Question

If D​ = 8,200 per​ month, S​ = ​$44 per​ order, and H​ = ​$2.00 per unit per​ month, ​a) What is the economic order​ quantity? The EOQ is 601601 units ​(round your response to the nearest whole​ number). ​b) How does your answer change if the holding cost​ doubles? The EOQ is 425425 units ​(round your response to the nearest whole​ number). ​c) What if the holding cost drops in​ half? The EOQ is nothing units ​(round your response to the nearest whole​ number).

Answer 1

Answer: A) The Economic Order Quantity is 601 units.  

B)The Economic Order Quantity is 425 units.

C )The Economic Order Quantity is 849 units

Explanation:

EOQ, economic order​ quantity = $\sqrt{ 2 x Dx S/ H}$

where D=  demand

S = Order cost

H= holding cost.

a)when  D​ = 8,200 per​ month, S​ = ​$44 per​ order, and H​ = ​$2.00

EOQ, economic order​ quantity = $\sqrt{2x D x S /H}$

=  $\sqrt{2 x 8,200 x 44 /2 }$ =  $\sqrt{360,800}$ = 600.666= 601 units

b) if the holding cost​ doubles, holding cost = HX 2 = 2 X 2  = 4

EOQ, economic order​ quantity =$\sqrt{ 2 x D xS /H }$

= $\sqrt{2 X 8,200 X 44 / 2 X 2}$ = $\sqrt{180,400}$ = 424.73 = 425units

C) if the holding cost drops in​ half, holding cost = H/2 = 2 X 1/2 = 1

EOQ, economic order​ quantity =$\sqrt{ 2 x D xS /H }$

= $\sqrt{2 X 8200 x 44/1}$ = $\sqrt{721,600}$ = 849.47 = 849units