Question

Davis Supply maintains an average inventory of 2,000 dinosaur skulls for sale to filmmakers. The carrying cost per skull per year is estimated to be $150.00 and the fixed order cost is $44. What is the economic order quantity (EOQ)? (Round to the nearest whole number.)

Answer 1

34

Step-by-step explanation:

Given that:

The annual average inventory requirement = 2000

The carrying cost per order per annum = 150

The fixed cost per order = 44

Thus, the Economic ordering quantity can be calculated by using the formula;

`Economic \ Order \ Quantity (EOQ)=\sqrt{(2 * Annual \ Demand * Cost \ Per \ order)/( Annual \ holding \ cost \ per \ unit)`

`Economic \ Order \ Quantity (EOQ)=\sqrt{(2 * 2000 * 44)/( 150)`

`Economic \ Order \ Quantity (EOQ)=\sqrt{(176000)/( 150)`

`Economic \ Order \ Quantity (EOQ)=√(1173.33333)`

Economic Order Quantity (EOQ) = 34.25

Economic Order Quantity (EOQ) ≅ 34 to the nearest whole number.