Table $5.4$
A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $\$ 30$ to process each order. The holding cost for each unit is $\$ 10$ per year. The company operates 52 weeks per year. You will need to refer to a normal table to answer the question(s).
-Use the information in Table 5.4. What is the economic order quantity (EOQ) for this item?
A) less than or equal to 175 units
B) greater than 175 units but less than or equal to 200 units
C) greater than 200 units but less than or equal to 225 units
D) greater than 225 units

Question

Quizplus · Accepted Answer

The EOQ is given by the formula:EOQ = sqrt((2*D*O)/H)where:D = demand per weekO = ordering costH = holding cost per unit per yearPlugging in the given values, we get:EOQ = sqrt((2*50*30)/10) = 173.21Therefore, the EOQ is less than or equal to 175 units.

Table 5.45.45.4 A Company Operating Under a Continuous Review System Has an Has

Table $5.4$ A Company Operating Under a Continuous Review System Has an Has