Question

Question 2 (2 points) ✓ Saved Economic Order Quantity (EOQ) - 4 marks Annual demand is 150,000 units. Cost to carry one unit in inventory for 1 year is $6 per unit and the transportation (ordering) costs are $100 per shipment. Calculate EOQ. Please show ALL of your work for full marks​

Answer 1

Answer: (EOQ)=2236 units

Step-by-step explanation:

The Economic Order Quantity (EOQ) formula is:EOQ = sqrt((2DS)/H)Where:

D = Annual demand

S = Cost per order

H = Holding cost per unit per yearGiven:

Annual demand (D) = 150,000 units

Cost per order (S) = $100

Holding cost per unit per year (H) = $6Substituting these values in the EOQ formula, we get:EOQ = sqrt((2 x 150,000 x 100)/6)EOQ = sqrt(5,000,000)EOQ = 2,236.07Therefore, the Economic Order Quantity (EOQ) is approximately 2,236 units.