Sawtooth Industries
Sawtooth Industries uses an economic order quantity (EOQ) model to manage its inventory investment. The company uses about 25,000 molded plastic assemblies each year. Order costs for these are $150 per order, while carrying costs are about $250 per unit per year. Assume a 365 day year.

-What is Sawtooth Industries' economic order quantity (EOQ)for these parts?

Question

Sawtooth Industries
Sawtooth Industries uses an economic order quantity (EOQ) model to manage its inventory investment. The company uses about 25,000 molded plastic assemblies each year. Order costs for these are $150 per order, while carrying costs are about $250 per unit per year. Assume a 365 day year.

-What is Sawtooth Industries' economic order quantity (EOQ)for these parts?

Quizplus · Accepted Answer

The EOQ is calculated using the formula: EOQ = sqrt((2 * Demand * Order Cost) / Carrying Cost). Plugging in the values: EOQ = sqrt((2 * 25000 * 150) / 250) = sqrt(30000) = 173.2, which rounds to 173 units.

Sawtooth Industries Sawtooth Industries Uses an Economic Order Quantity (EOQ) Model to Model