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tatiyna
1 year ago
9

Matthew​ Liotine's Dream Store sells water beds and assorted supplies. His​ best-selling bed has an annual demand of 395 units.

Ordering cost is ​$38​; holding cost is ​$5 per unit per year. ​a) To minimize the total​ cost, how many units should be ordered each time an order is​ placed? EOQ​ = nothing units ​(round your response to the nearest whole​ number).
Business
1 answer:
Sergeu [11.5K]1 year ago
8 0

Answer:

77.48 units

Explanation:

Data provided in the questions

Annual demand = 395 units

Ordering cost = $38

Holding cost per unit per year = $5

The computation of the economic order quantity is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

= \sqrt{\frac{2\times \text{395}\times \text{\$38}}{\text{\$5}}}

= 77.48 units

hence, the economic order quantity is 77.48 units

We simply applied the above formula so that approximate units could come. And it always expressed in units

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