The management accountant of Prince & Porter plc has worked out that the demand for the period for inventory item BB774 is 900 units.The holding cost per unit is £3.75 and the order cost is £10 per order.What is the Economic Order Quantity (to the nearest whole unit)?

Question

Quizplus · Accepted Answer

Economic Order Quantity (EOQ) = sqrt((2 x demand x order cost)/holding cost)

EOQ = sqrt((2 x 900 x 10)/3.75) = 68.9897 or approximately 69 units. Therefore, the best choice is C. This is the quantity at which the total cost of ordering and holding inventory is minimized.

The Management Accountant of Prince & Porter Plc Has Worked