How many cases of microwave popcorn are sold annually by a firm that has total annual order costs of $32,000,orders in units of 100 cases,and is charged $90 per order in addition to the $72 per case product cost?
A) 20,250 cases
B) 35,556 cases
C) 44,444 cases
D) 49,383 cases

Question

Quizplus · Accepted Answer

To find out the annual demand for microwave popcorn, we need to calculate the Economic Order Quantity (EOQ) using the following formula:

EOQ = √[(2 x annual demand x order cost) / holding cost per unit]

Here, the order cost is $90 per order, and the holding cost per unit is $72. Let's assume that the annual demand is X cases. So, we can plug in these values and simplify:

100(X/EOQ) x $90 + (X/EOQ) x $72 = $32,000

Solving for X, we get X = 35,555.56 cases, which we can round up to 35,556 cases. Therefore, the firm sells 35,556 cases of microwave popcorn annually.

Hence, the best choice is B) 35,556 cases.

How Many Cases of Microwave Popcorn Are Sold Annually by a Firm