Question

William Beville’s computer training school, in Richmond, stocks workbooks with the following characteristics:

Demand D = 19,300 units/year

Ordering cost S = $24/order

Holding cost H = $4/unit/year

a) Calculate the EOQ for the workbooks.

Answer 1

The Economic Order Quantity (EOQ) for the workbooks is approximately 3,405 units.

Step-by-step explanation:

The Economic Order Quantity (EOQ) can be calculated using the following formula:

EOQ = sqrt((2 * D * S) / H)

Where:

• D = annual demand (19,300 units/year)
• S = ordering cost ($24/order)
• H = holding cost ($4/unit/year)

Substituting the values into the formula:

EOQ = sqrt((2 * 19,300 * 24) / 4) = sqrt(11,592,000) = 3,405.48

Therefore, the EOQ for the workbooks is approximately 3,405 units.