Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items:
Refer to Figure 20-2. The economic order quantity for this item is
A) 1,500 units.
B) 364 units.
C) 140 units.
D) 725 units.

Question

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items:
 Refer to Figure 20-2. The economic order quantity for this item is
A) 1,500 units. 
B) 364 units. 
C) 140 units. 
D) 725 units.

Quizplus · Accepted Answer

The economic order quantity formula is EOQ = square root of [(2DS)/H], where D is the annual demand, S is the cost of placing an order, and H is the holding cost per unit. Plugging in the given values, we get EOQ = square root of [(2 x 22,000 x 6)/28] = 363.6, which rounds up to 364. Therefore, the best choice is B.

Figure 20 -2 Walrus Company Has the Following Information Available