If a company has an ordering cost of $250,a carrying cost of $4 per unit,and annual product demand of 6,000 units,the optimal order quantity is approximately
A)923
B)866
C)751
D)1,027

Question

Quizplus · Accepted Answer

The optimal order quantity can be calculated using the Economic Order Quantity (EOQ) formula: EOQ = sqrt((2DS)/H), where D is the demand (6,000 units), S is the ordering cost ($250), and H is the holding or carrying cost per unit ($4). Plugging in the values: EOQ = sqrt((2*6000*250)/4) = sqrt(3000000/4) = sqrt(750000) ≈ 866. Thus, the optimal order quantity is approximately 866 units.

If a Company Has an Ordering Cost of $250,a Carrying