A camera retailer estimates that it can sell 1,000 rolls of film each year.Each roll costs the retailer $1.50;holding costs equal 25 percent of unit costs;and order costs are $15 per order.The economic order quantity is _____ rolls.

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is √((2DS)/H), where D is demand (1,000 rolls), S is order cost ($15), and H is holding cost per unit ($1.50 * 25% = $0.375). Plugging in these values gives EOQ = √((2*1000*15)/0.375) = 283 rolls.

A Camera Retailer Estimates That It Can Sell 1,000 Rolls