Question

Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 14 comma 700 units. Southeastern estimates its annual holding cost for this item to be ​$24 per unit. The cost to place and process an order from the supplier is ​$76. The company operates 300 days per​ year, and the lead time to receive an order from the supplier is 3 working days. ​a) What is the economic order​ quantity? nothing units ​(round your response to the nearest whole​ number).

Answer 1

305 units

Step-by-step explanation:

The calculation of the economic order quantity is given below:

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

where,

Annual demand is 14,700 units

Ordering cost is $76 per order

And, the holding cost or carrying cost is $24 per unit

So the economic order quantity is

`= \sqrt{\frac{2* \text{14,700}* \text{\$76}}{\text{\$24}}}`

= 305 units

We simply applied the above formula to determine the economic order quantity