Albuquerque Company has the following information available concerning one of its inventory items: $$\begin{array} { l r }
\text { Cost of placing an or der } & \$ 50.00 \
\text { Unit carrying cost per year } & \$ 2.00 \
\text { Annual unit demand } & 3,200 \
\text { Safety stock } & 80 \
\text { Average daily demand } & 10 \
\text { Normal lead time in days } & 12
\end{array}$$ The economic order quantity for this item is
A)16 units.
B)160,000 units.
C)500 units.
D)400 units.

Question

Albuquerque Company has the following information available concerning one of its inventory items: $$\begin{array} { l r } 
\text { Cost of placing an or der } & \$ 50.00 \
\text { Unit carrying cost per year } & \$ 2.00 \
\text { Annual unit demand } & 3,200 \
\text { Safety stock } & 80 \
\text { Average daily demand } & 10 \
\text { Normal lead time in days } & 12
\end{array}$$ The economic order quantity for this item is
A)16 units.
B)160,000 units.
C)500 units.
D)400 units.

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) is calculated using the formula: EOQ = sqrt((2 * Demand * Order Cost) / Carrying Cost). Plugging in the values: EOQ = sqrt((2 * 3200 * 50) / 2) = sqrt(160000) = 400 units.

Albuquerque Company Has the Following Information Available Concerning One of Its