Question

Joe Henry's machine shop uses 2,550 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:

What is the EOQ?

Answer 1

The student is asking for the Economic Order Quantity (EOQ), which is used to minimize inventory costs. The EOQ cannot be calculated without the missing information on ordering and holding costs. With all required data, EOQ can be found using the formula √((2 * Demand * Ordering Cost) / Holding Cost).

Step-by-step explanation:

The question is asking to calculate the Economic Order Quantity (EOQ), which is a fundamental formula used in inventory management to determine the optimal order size that minimizes the total inventory costs. The EOQ formula requires knowledge of the annual demand for the product, the cost per order, and the holding cost per unit per year. Unfortunately, the student's query is missing the latter two pieces of information: the cost to place an order and the annual holding cost per bracket. Without these, it is impossible to compute the EOQ accurately.

To calculate the EOQ, once all the necessary information is provided, the formula is:

EOQ = √((2 * Demand * Ordering Cost) / Holding Cost)

For instance, if the ordering cost per order is $X and annual holding cost per bracket is $Y, you would substitute these values along with the annual demand into the formula to find the EOQ.