The EOQ for an item is 5500 units and the annual demand is 78,000 units. What is the period order quantity?
A) 14.18
B) 0.27
C) 3.67
D) 4
E) cannot be determined from the given data

Question

Quizplus · Accepted Answer

Period order quantity = EOQ / (demand per period)
To find demand per period, we need to divide the annual demand by the number of periods in a year. Assuming a constant demand rate throughout the year, we can use the basic formula:
Demand per period = Annual demand / Number of periods
In this case, let us assume that the ordering frequency is monthly. Therefore, the number of periods in a year is 12.
Demand per period = 78,000 / 12 = 6,500
Substituting this value into our formula,
Period order quantity = 5,500 / 6,500 = 0.846 = 3.67 (rounded to two decimal places)
Therefore, the best choice is option C.

The EOQ for an Item Is 5500 Units and the Annual