A certain type of computer costs $10 per unit, and the annual holding cost is 25% of the value of the item. Annual demand is 1,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?
A) 120,000
B) 866
C) 110
D) 1095
E) 346

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is √((2DS)/H), where D is demand (1,000 units), S is order cost ($150), and H is holding cost per unit ($10 * 25% = $2.5). Plugging in these values gives √((2*1000*150)/2.5) = √(120,000/2.5) = √48,000 = 219.2, which is approximately 346.

A Certain Type of Computer Costs $10 Per Unit, and the Annual