If a company sells 1 million units a year, has an ordering cost of $500 per order, and has a carrying cost per unit of $0.02, the economic order quantity is closest to:

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is √((2DS)/H), where D is demand (1,000,000 units), S is ordering cost ($500), and H is carrying cost per unit ($0.02). Plugging in these values gives an EOQ closest to 50,000 units.

If a Company Sells 1 Million Units a Year, Has