If a lawn mower assembly plant orders 25,000 frames per year at a price of $27 each, what is the EOQ if the ordering cost per order is $35 and the annual inventory carrying cost is 12%?
A) 735
B) 255
C) 567
D) 520

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the demand (25,000 frames), $S$ is the ordering cost per order ($35), and $H$ is the annual holding cost per unit, which is 12% of the cost per frame ($27 * 0.12 = $3.24). Plugging these values into the formula gives $\sqrt{\frac{2*25000*35}{3.24}} \approx 735$.

If a Lawn Mower Assembly Plant Orders 25,000 Frames Per