Question

You have a product with annual demand of 11000 , ordering cost of 160 , and annual holding cost of 21. You want to order according to the EOQ. What is your average inventory? Answer to the nearest whole number

Answer 1

The average inventory using the EOQ model is approximately 952 units.

Step-by-step explanation:

To calculate the average inventory using the Economic Order Quantity (EOQ) model, you can use the formula:

Average Inventory = √(2 * Annual Demand * Ordering Cost / Annual Holding Cost)

Substituting the given values, we get: Average Inventory = √(2 * 11000 * 160 / 21) ≈ 952

Therefore, the average inventory is approximately 952 units.