Question

We sell ice cream at a retail store, which we operate 50 weeks per year. Whenever we order from our supplier we incur a $250 ordering charge. Customer demand is 200 pounds per week and it costs us $35 per pound per year to hold the ice cream in proper storage. a) What is the EOQ?

Answer 1

Answer:

the EOQ is 378 units

Step-by-step explanation:

The computation of the economic order quantity(EOQ) is shown below:

EOQ is

$= \sqrt{\frac{2\times A\times O}{C} } \\\\= \sqrt{\frac{2\times 200 \times 50\times \ 250}{\ 35} }$

= 378 units

Here A represent the annual demand

O represent the ordering cost

And, C represent the carrying cost

hence, the EOQ is 378 units