Kraus Department Store,located in Chicago,sells 1,700 coffeemakers per year.The purchase price of each coffeemaker is $70.The ordering cost is $90 per order.The holding cost is 30% of the unit purchase price.In this example,the economic order quantity is given by ______.
A)the square root of ((2 * 1700 * 90)/ 90))
B)the square root of ((2 * 1700 * 90)/ 21))
C)the square of ((2 * 1700 * 90)/ 90))
D)the square of ((2 * 1700 * 90)/ 21))

Question

Quizplus · Accepted Answer

Economic Order Quantity (EOQ) = sqrt((2DS/H))
Where,
D = Annual Demand = 1700
S = Ordering Cost = $90
H = Holding Cost = 30% of $70 = $21
EOQ = sqrt((2*1700*90)/21) = 594.09 (Approximately)
Therefore, the best choice is option B.

Kraus Department Store,located in Chicago,sells 1,700 Coffeemakers Per Year