Answer the following questions using the information below:
North Ryde Optics sells optical equipment.Vision Lenses manufactures special glass lenses.North Ryde Optics orders 10 400 lenses per year,200 per week at $20 per lens.Vision Lenses covers all shipping costs.North Ryde Optics earns 30% on its cash investments.The purchase-order lead time is 2.5 weeks.North Ryde Optics sells 250 lenses per week.The following data are available:
Relevant ordering costs per purchase order $\quad\quad\quad \$ 21.25 $
Relevant insurance, materials handling, breakage,
and so on, per year$\quad\quad\quad\quad\$2.50$

-What is the economic order quantity (EOQ)for North Ryde Optics?
A)325 lenses
B)210 lenses
C)297 lenses
D)228 lenses

Question

Answer the following questions using the information below:
North Ryde Optics sells optical equipment.Vision Lenses manufactures special glass lenses.North Ryde Optics orders 10 400 lenses per year,200 per week at $20 per lens.Vision Lenses covers all shipping costs.North Ryde Optics earns 30% on its cash investments.The purchase-order lead time is 2.5 weeks.North Ryde Optics sells 250 lenses per week.The following data are available:
 Relevant ordering costs per purchase order $\quad\quad\quad \$ 21.25 $
 Relevant insurance, materials handling, breakage, 
and so on, per year$\quad\quad\quad\quad\$2.50$

-What is the economic order quantity (EOQ)for North Ryde Optics?
A)325 lenses
B)210 lenses
C)297 lenses
D)228 lenses

Quizplus · Accepted Answer

To calculate EOQ, we use the formula: 
EOQ = sqrt((2DS) / H) 
where,
D = annual demand = 10,400 lenses
S = ordering cost per order = ($20 x 200) = $4,000
H = holding cost per unit per year = ($20 x 0.3) = $6
So, 
EOQ = sqrt((2 x 10,400 x 4,000) / 6) 
EOQ = 228.28 which rounds off to 228 lenses
Therefore, the economic order quantity (EOQ) for North Ryde Optics is 228 lenses.

Answer: D only
 
North Ryde Optics should order the economic order quantity (EOQ) of 228 lenses, which will minimize the total cost of holding and ordering inventory. Other order quantities will either increase the ordering cost or the holding cost.

Answer the Following Questions Using the Information Below: North Ryde $21.25\quad\quad\quad \$ 21.25 $21.25

Answer the Following Questions Using the Information Below:
North Ryde $\quad\quad\quad \$ 21.25$