Calculate the EOQ size for the following case.What is the EOQ size and the number of orders placed per quarter? For your answer, round up the figures up to 0 decimal points.(size/number)
The average demand for the item is 540 units per quarter.It costs $150 to place an order.The item's price is $250 per unit and carrying cost ratio for the year is 20%.

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the demand, $S$ is the ordering cost, and $H$ is the holding cost per unit per period. Here, $D=540$ units per quarter, $S=$150$, and $H=20\%$ of the item's price, which is $0.20 \times $250 = $50$ per unit per year. Since we're calculating for a quarter, $H$ for the quarter is $\frac{$50}{4} = $12.5$. Plugging these values into the EOQ formula gives $\sqrt{\frac{2 \times 540 \times 150}{12.5}} \approx 147$ units. The number of orders per quarter is $D / \text{EOQ} = 540 / 147 \approx 3.67$, which rounds up to 4 times per quarter.

Calculate the EOQ Size for the Following Case