Answer the following question(s)using the information below:
Garry's Golf Supplies is a local retail outlet which sells golf balls.Garry's purchases the golf balls from Green Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72, FOB destination.Annual demand is 172,800 golf balls at a rate of 3,322 balls per week.Garry's Golf Supplies earns 12% on its cash investments.The purchase order lead time is one week.The following cost data are available:

-What is the economic order quantity for Garry's golf ball purchases?
A)200 cartons
B)288 cartons
C)300 cartons
D)883 cartons
E)218 cartons

Question

Answer the following question(s)using the information below:
Garry's Golf Supplies is a local retail outlet which sells golf balls.Garry's purchases the golf balls from Green Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72, FOB destination.Annual demand is 172,800 golf balls at a rate of 3,322 balls per week.Garry's Golf Supplies earns 12% on its cash investments.The purchase order lead time is one week.The following cost data are available:
 
-What is the economic order quantity for Garry's golf ball purchases?
A)200 cartons 
B)288 cartons 
C)300 cartons 
D)883 cartons 
E)218 cartons

Quizplus · Accepted Answer

The economic order quantity (EOQ) can be calculated using the formula:
EOQ = sqrt((2 * demand * cost of ordering) / carrying cost per unit)
Substituting the given values, we get:
EOQ = sqrt((2 * 172800 * 25) / (0.12 * 72 * 0.75)) = 288.67
Rounding off to the nearest whole number, the EOQ is 288 cartons. Therefore, option B is the best choice.

Answer the Following Question(s)using the Information Below