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A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis. What's the economic
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A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.

What's the economic order quantity?

User Jjperezaguinaga
by
3.3k points

1 Answer

5 votes

Answer: 50

Step-by-step explanation:

Annual demand = D = 100

Cost of each box = C = $4

Ordering cost = S = $10

Carrying cost = I = 20 × $4 = $0.8

Economic order quantity = ✓2DS/I

= ✓(2×100×10/0.8

= √2500

= 50

User Sepang
by
3.9k points
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