Ticktock Clocks sells 10,000 alarm clocks each year. If the total cost of placing an order is $65 and it costs $85 per year to carry the alarm clock in inventory, calculate the optimal order size using the EOQ formula. Round your final answer to nearest whole number.
A) 124 clocks
B) 161 clocks
C) 15,294 clocks
D) 26,154 clocks

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the demand (10,000 clocks per year), $S$ is the ordering cost ($65), and $H$ is the holding cost per unit per year ($85). Plugging in the values, we get $\sqrt{\frac{2*10000*65}{85}} \approx 123.693$, which rounds to 124 clocks.

Ticktock Clocks Sells 10,000 Alarm Clocks Each Year