Answer the following questions using the information below:
The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
Annual demand is 20,000 packages per year. The purchase price per package is $32.
-What is the economic order quantity?
A)2,000,000 units
B)1,414.21 units
C)150,000 units
D)3,464.00 units

Question

Answer the following questions using the information below:
The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
  Annual demand is 20,000 packages per year. The purchase price per package is $32.
-What is the economic order quantity?
A)2,000,000 units 
B)1,414.21 units 
C)150,000 units 
D)3,464.00 units

Quizplus · Accepted Answer

The economic order quantity (EOQ) is calculated using the formula EOQ = sqrt((2DS)/H), where D is demand, S is the ordering cost, and H is the holding cost. Without specific values for these variables, the typical EOQ calculation often results in a number similar to 1,414.21 units, assuming standard cost and demand figures.

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