Question

Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (Model TS111). Ray has estimated the annual demand for this model at 1,174 units. His cost to carry one unit is $55 per year per unit, and he has estimated that each order costs $24 to place. How many should Ray order each time?

Answer 1

Ray should place 32 orders each time.

Step-by-step explanation:

number Ray should order each time

= sqrt(2*Annual Demand*Ordering Cost /Carrying cost per unit per annum )

= sqrt(2*1,174*$24/$55)

= 32

Therefore, Ray should place 32 orders each time.