Southwestern Supply Company has an economic order quantity for item A of 200 units. The annual demand for the product is 5,000 units, and the cost of placing an order is $8. The carrying cost per unit is
A) $6.00.
B) $2.00.
C) $4.00.
D)$141.00.

Question

Quizplus · Accepted Answer

Using the formula for economic order quantity, EOQ = sqrt((2*annual demand*order cost)/carrying cost per unit), we can solve for the carrying cost per unit. 
200 = sqrt((2*5000*8)/carrying cost per unit)
Carrying cost per unit ≈ $2. Therefore, the best choice is B.

Southwestern Supply Company Has an Economic Order Quantity for Item