Question

An appliance repair shop buys and uses about 4,212 fan motors annually. Holding cost is 27 dollars per motor per year, and ordering cost is 177 dollars per order. Determine the economic order quantity. Round your number to ZERO decimal point.

Answer 1

Answer:

15,251 units

Explanation:

The formula for Economic order quantity is;

EOQ = √2DS/H

Where,

D = Annual demand = 4,212

S = Ordering cost = $177

H = Holding cost = $27/4,212 = $0.00064102564

EOQ = √ 2 × 4,212 × $177 / $0.00064102564

EOQ = √ $1,491,048 / $0.00064102564

EOQ = √232603488.37

EOQ = 15,251 units