Question

Consider the following information.

What will be the Economic Ordering Quantity (EOQ)?

A 225 units Correct Answer Incorrect Answer
B 242 units Correct Answer Incorrect Answer
C 252 units Correct Answer Incorrect Answer
D 258 units Correct Answer Incorrect Answer

Solution

A-2400(Annual Demand) B-4.00(Ordering Cost per order) C-2.40×12%=0.288(Carrying Cost per order) According to the formula, EOQ=√2AB/C Putting the values, EOQ=√2×2400×4/0.288 =√80000 =258.1 units or 258 units. Therefore, EOQ is 258 units.

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