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, use the EOQ formula to calculate the optimal order size.

Question

Quizplus · Accepted Answer

The EOQ formula is: EOQ = sqrt((2*D*O)/H), where D is the annual demand, O is the ordering cost, and H is the holding cost. Plugging in the given values, we get: EOQ = sqrt((2*10,000*$65)/$85) = 124 clocks.

Ticktock Clocks Sells 10,000 Alarm Clocks Each Year