Use this information below to calculate the optimal order quantity:
Annual demand for backpacks is 43,000 units
The cost to place an order is $220
The per unit cost of the item is $60.00
The annual holding rate is 37.5%
Choose the closest answer.
A)920 units
B)250 units
C)710 units
D)830 units

Question

Quizplus · Accepted Answer

The optimal order quantity is 920 units. This can be calculated using the following formula:EOQ = √(2*D*O)/Hwhere:D = annual demandO = ordering costH = holding costPlugging in the given values, we get:EOQ = √(2*43,000*$220)/0.375= 920 units

Use This Information Below to Calculate the Optimal Order Quantity