10. You have been tasked with determining the EOQ for a certain aspect of raw materials...

10. You have been tasked with determining the EOQ for a certain aspect of raw materials inventory. Fixed ordering costs are $35 per order, total periodic demand is 10,000 units, and the per unit holding cost is $4. What is the EOQ?

	a.	4180 units
	b.	300 units
	c.	418 units
	d.	1200 units

Solutions

Expert Solution

Economic order quantity (EOQ) = [(2 * demand * ordering cost) / holding cost]^1/2

Economic order quantity (EOQ) = [(2 * 10000 * 35) / 4]^1/2

Economic order quantity (EOQ) = [700,000 / 4]^1/2

Economic order quantity (EOQ) = [175,000]^1/2

Economic order quantity (EOQ) = 418 units

jeff jeffy answered 2 years ago

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