Cohen Industrial Products uses 3,600 switch assemblies per week and then reorders another 3,600 units. The annual carrying cost per switch assembly is $9.74, and the fixed order cost is $78. What is the EOQ?
A) 1,980 units
B) 1,809 units
C) 1,732 units
D) 2,278 units
E) 1,698 units

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the annual demand, $S$ is the ordering cost, and $H$ is the holding or carrying cost per unit per year. Given that Cohen Industrial Products uses 3,600 units per week, the annual demand $D = 3,600 \times 52 = 187,200$ units. The ordering cost $S = $78$, and the carrying cost $H = $9.74$. Plugging these values into the EOQ formula gives $\sqrt{\frac{2 \times 187,200 \times 78}{9.74}} \approx 1,732$ units.

Cohen Industrial Products Uses 3,600 Switch Assemblies Per Week and Then