Question

In the basic EOQ model, if annual demand is 2000 per year, the set up costs are $80, and holding cost is $10 per unit per month, what is the economic order quantity?

a. 126
b. 52
c. 179
d. 25
e. 37

Answer 1

The economic order quantity (EOQ) for the given values is 179.

Step-by-step explanation:

The economic order quantity (EOQ) can be calculated using the formula:

EOQ = √((2 * demand * setup cost) / holding cost)

Substituting the given values, EOQ = √((2 * 2000 * 80) / 10) = √32000 = 179

Therefore, the economic order quantity is 179.