Question

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

Demand D 19,100 ​units/year
Ordering cost S ​$24​/order
Holding cost H ​$5​/unit/year ​

a) The EOQ for the workbooks is _______ ​(round your response to the nearest whole​ number).

Answer 1

428 units

Step-by-step explanation:

The computation of the economic order quantity is shown below:

Data provided in the question

Annual demand = 19,100 per year

Ordering cost per order = $24

And, the holding cost or carrying cost per unit is = $5

So, the economic order quantity is

`= \sqrt{\frac{2* \text{Annual demand}* \text{Ordering cost}}{\text{Carrying cost}}}`

`= \sqrt{\frac{2* \text{19,100}* \text{\$24}}{\text{\$5}}}`

= 428 units

Hence, the economic order quantity is 428 units