Question

santiago's satellite emporium wishes to determine the best order size for its best-selling satellite dish (model ts111). santiago has estimated the annual demand for this model at 1,950 units. his cost to carry one unit is $65 per year per unit, and he has estimated that each order costs $28 to place.using the eoq model, how many should santiago order each time?note: round your answer to the nearest whole number.

Answer 1

To determine the best order size for Santiago's best-selling satellite dish, the EOQ model recommends ordering 41 units each time.

Step-by-step explanation:

To determine the best order size using the Economic Order Quantity (EOQ) model, we need to consider the annual demand, the cost to carry one unit, and the cost to place an order. In this case, the annual demand for the model TS111 satellite dish is 1,950 units, the carrying cost per unit is $65 per year, and the order cost is $28. The formula to calculate the EOQ is:

EOQ = √((2 * Annual demand * Order cost) / Carrying cost per unit)

Plugging in the values, we get:

EOQ = √((2 * 1950 * 28) / 65) = √(109200 / 65) = √1677.54 ≈ 41.01

Rounding up to the nearest whole number, Santiago should order 41 units each time.