Question

ray's satellite emporium wishes to determine the best order size for its best-selling satellite dish. ray has estimated the annual demand for this model at 869 units. his cost to carry one unit is $112 per year per unit, and he has estimated that each order costs $26 to place. how many should ray order each time? please round to a whole number.

Answer 1

Using the EOQ formula with provided values, Ray's optimal order size for the satellite dish is 20 units, rounded to the nearest whole number to minimize inventory costs.

Step-by-step explanation:

To determine the optimal order size for Ray's best-selling satellite dish (referred to as the Economic Order Quantity or EOQ), we use the EOQ formula: EOQ = √((2 * Demand * Order cost) / Carrying cost)

Given that the annual demand is 869 units, the cost to carry one unit is $112, and the order cost is $26, we plug these values into the formula: EOQ = √((2 * 869 * $26) / $112) = √((45268) / $112) = √(404.3571429) = 20.108 units

Round this to the nearest whole number, Ray should order 20 units each time to minimize total inventory costs.