Question

Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation.​ Thomas's fastest-moving inventory item has a demand of 6 comma 100 units per year. The cost of each unit is ​$104​, and the inventory carrying cost is ​$9 per unit per year. The average ordering cost is ​$29 per order. It takes about 5 days for an order to​ arrive, and the demand for 1 week is 122 units.​ (This is a corporate​ operation, and there are 250 working days per​ year). ​a) What is the​ EOQ? nothing units ​(round your response to two decimal​ places).

Answer 1

The Economic order quantity is 196.64 units.

Step-by-step explanation:

Answer 2

The Economic order quantity is 196.64 units.

Step-by-step explanation:

Economic Order Quantity (EOQ): The Economic order quantity is that quantity which the firms has to produced by maintaining the minimum cost like carrying cost, ordering cost, etc.

The formula to compute EQO is shown below

=
`\sqrt{\frac{2* \text{annual demand}* \text{ordering cost per order}}{\text{carrying cost per unit\\ } }`

=
`\sqrt{\frac{2* \text{6,000}* \text{29}}{\text{9\\ } }`

= 196.64 units

Hence, the Economic order quantity is 196.64 units