What are the total restocking costs using the EOQ?

Question

Quizplus · Accepted Answer

Using the EOQ formula, we can calculate that the optimal order quantity is 200 units.

Total ordering cost = (Annual demand/order quantity) x Cost per order
Total ordering cost = (1000/200) x $80 = $400

Total carrying cost = (Order quantity/2) x Carrying cost per unit
Total carrying cost = (200/2) x $2 = $200

Therefore, the total restocking cost using EOQ is $400 + $200 = $600.

Hence, the best choice is option C, which gives the correct total restocking cost.

What Are the Total Restocking Costs Using the EOQ