Question

Use the information below to calculate the number of orders per year when using the EOQ: Annual demand for an item is 43,000 units The cost to place an order is $200 The per unit cost of the item is $50.00 The annual holding rate is 35% Choose the closest answer.

Answer 1

The closest answer is 49.

Step-by-step explanation:

Given that,

Annual demand, D = 43,000 units

Ordering cost, O = $200

Per unit cost of the item = $50

Annual holding cost, H = annual holding rate × Per unit cost of the item

= 35% × $50

= $17.5

`EOQ=\sqrt{(2* D* O)/(H) }`

`EOQ=\sqrt{(2* 43,000* 200)/(17.5) }`

= 991.39

= 992 units

Therefore,

Number of orders per year = Annual demand ÷ EOQ

= 43,000 ÷ 992

= 43.34

Hence, the closest answer is 49 and this is not given in the question.