Question

ohn sells 300 packs of candies per week at $40 per pack. the candies are ordered from a supplier who charges john $60 per order and $20 per pack. john's annual holding cost percentage is 0.2. assume john operates 50 weeks a year. what is the economic order quantity that minimizes the total ordering and holding cost per year?

Answer 1

EOQ= √(2⋅D⋅S/H)

    √(2⋅15000⋅$60/$4)

    √(1800000/4)

    √450000

  =670.8 or 671

 Economic order quantity that minimizes the total ordering and holding cost per year=671, Hence 1st option is correct.

Economic order quantity that minimizes the total ordering and holding cost per year=671

 

  In this question, John sells candies. By using the information provided in the question, we calculated the value for Economic Order quantity that minimizes the total ordering and holding cost per year,  which is 671.

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