Question

if annual demand is 25913 units, the ordering cost is $19 per order and the holding cost is $4 per unit per year, what is the optimal order quantity using the fixed-order quantity model?

Answer 1

The optimal order quantity using the fixed-order quantity model is approximately 2218 units.

Step-by-step explanation:

The optimal order quantity using the fixed-order quantity model can be calculated using the Economic Order Quantity (EOQ) formula.

EOQ = sqrt((2 * annual demand * ordering cost) / holding cost)

Substituting the given values:

EOQ = sqrt((2 * 25913 * 19) / 4) = sqrt(4928978.5) = 2218.28

Therefore, the optimal order quantity is approximately 2218 units.