A small businesses owner that sells little red wagons meets the qualifications outlined in the economic order quantity (EOQ)model.His store sells 800 little red wagons per year.When he orders little red wagons from his supplier,his ordering costs amount to $15.The little red wagons cost the owner $1.00 per wagon per year to hold in inventory.What is the owner's EOQ,and how many times per year should he order little red wagons from his supplier?

Question

Quizplus · Accepted Answer

EOQ = sqrt((2*D*O)/H) = sqrt((2*800*$15)/$1) = 155Number of orders per year = D/EOQ = 800/155 = 5.16 (round up to 6)

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