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

Quizplus · Accepted Answer

The EOQ formula is √((2DS)/H), where D is demand (25,000 units), S is order cost ($150), and H is holding cost ($250). Plugging in these values gives EOQ = √((2*25000*150)/250) = √(30000) = 173 units.

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