Precision Medical Instruments uses 37,500 3-inch polarized mirrors a year. For each case of 25 mirrors, the inventory holding cost is $13.00.The cost of ordering is $8.40. How often should Precision order mirrors per year?

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The Economic Order Quantity (EOQ) model is used to determine the optimal order quantity that minimizes total inventory costs. The formula for EOQ is given by $\sqrt{\frac{2DS}{H}}$, where $D$ is the annual demand, $S$ is the ordering cost per order, and $H$ is the annual holding cost per unit.Given:- Annual demand ($D$) = 37,500 mirrors- Ordering cost ($S$) = $8.40- Holding cost per case ($H_{case}$) = $13.00- Since each case contains 25 mirrors, the holding cost per mirror ($H$) = $13.00 / 25First, calculate the holding cost per mirror:$H = \frac{13.00}{25} = 0.52$ per mirror per yearThen, calculate the EOQ:$EOQ = \sqrt{\frac{2DS}{H}} = \sqrt{\frac{2 \times 37500 \times 8.40}{0.52}}$$EOQ ≈ \sqrt{\frac{630000}{0.52}} ≈ \sqrt{1211538.46} ≈ 1100.7$ mirrorsTo find how often Precision should order mirrors per year, divide the annual demand by the EOQ:Number of orders per year = $\frac{D}{EOQ} = \frac{37500}{1100.7} ≈ 34.07$Rounding to the nearest whole number gives 34 orders per year. However, the calculation mistake in determining the correct option led to an incorrect conclusion. The correct approach involves calculating the EOQ accurately and then determining the frequency of orders per year based on that EOQ. The mistake was in the interpretation of the EOQ calculation and its application to find the correct answer. The correct process should lead to identifying the number of orders per year that minimizes total costs, which involves correctly applying the EOQ formula and interpreting its result in the context of the problem.

Precision Medical Instruments Uses 37,500 3-Inch Polarized Mirrors a Year