Question

Diagnostic supplies has expected sales of 84,100 units per year, carrying costs of $5 per unit, and an ordering cost of $10 per order.
a. what is the economic ordering quantity?

Answer 1

Using the equation for Economic order quantity

(EOQ) = √( 2 S O / C)

where S = 84,100, O = $10 per order, C = $5 per unit. Substituting the given values to the equation, we get :

EOQ =√(2 * 84,100194,400 * 10 / 5) = 580

Therefore, the economic ordering quantity is 580 units