Solve the problem.
-A bookstore has an annual demand for 63,000 copies of a best-selling book. It costs $0.40 to store one copy for one year, and it costs $125 to place an order. Find the optimum number of copies per order.
A) 5,648 copies
B) 6,275 copies
C) 9,922 copies
D) 8,099 copies

Question

Quizplus · Accepted Answer

To find the optimum number of copies per order, we need to use the economic order quantity (EOQ) formula:

EOQ = sqrt((2DS)/H)

where
D = annual demand = 63,000 copies
S = cost per order = $125
H = holding cost per unit per year = $0.40

Plugging in the values, we get:

EOQ = sqrt((2 x 63,000 x 125)/0.4) = 6,274.98 (rounded to nearest whole number)

Therefore, the best choice is B) 6,275 copies, as it minimizes the total annual inventory cost. The optimum number of copies per order can be found using the Economic Order Quantity (EOQ) formula:

EOQ = sqrt((2DS)/H)

where:
D = annual demand (63,000 in this case)
S = cost per order ($125 in this case)
H = holding cost per unit per year ($0.40 in this case)

Plugging in the values, we get:

EOQ = sqrt((2 x 63,000 x 125)/0.40) = 6,275

Therefore, the best choice is to order 6,275 copies per order. Any other amount will either result in excess holding costs or excess ordering costs.

Solve the Problem. -A Bookstore Has an Annual Demand for 63,000 Copies of 63,000