High Mountain consistently sells 2,400 pairs of $189 skates annually. The fixed order costs is $56 and the carrying costs are $3.85 a pair. What is the economic order quantity?
A) 246 pairs
B) 215 pairs
C) 229 pairs
D) 264 pairs
E) 248 pairs

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the demand (2,400 pairs), $S$ is the ordering cost ($56), and $H$ is the holding cost per unit per year ($3.85). Plugging in the values: $\sqrt{\frac{2*2400*56}{3.85}} \approx 264$ pairs.

High Mountain Consistently Sells 2,400 Pairs of $189 Skates Annually