Calculate the EOQ size for the following case.What is the EOQ size and the number of orders placed per year? For your answer, round up the figures up to 0 decimal points.(size/number)
The annual demand for the item is 2580 units.It costs $500 to place an order and costs $20 per item to carry it a year without passing it to the customer.

Question

Quizplus · Accepted Answer

EOQ formula is:
EOQ = sqrt((2DS)/H)
Where D = Annual demand
S = Ordering cost per order
H = Annual holding cost per unit
In this case, D = 2580, S = $500, and H = $20.
EOQ = sqrt((2*2580*500)/20) = 360.55
Round up the EOQ value to the nearest whole number, which gives the EOQ size of 360 units.
The number of orders placed per year can be calculated using the formula:
Number of orders = Annual Demand/EOQ
Number of orders = 2580/360 = 7.17
Round up the number of orders to the nearest whole number, which gives the number of orders placed per year as 8.
Therefore, the best choice is D, with an EOQ size of 360 units and the number of orders placed per year as 8.

Calculate the EOQ Size for the Following Case