Answer :
Answer:
The optimum order size is 2,070 units.
Explanation:
For computing the optimum order size, we have to compute the economic order quantity which is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
annual demand is 60,000
Ordering cost is 25 per order
and carrying cost is 0.70 per unit
Now put the values to the above formula
So, the answer would be
= [tex]\sqrt{\frac{2\times \text{60,000}\times \text{25}}{\text{0.70}}}[/tex]
= 2,070 units
Hence, the optimum order size is 2,070 units.
Answer:
The correct answer to the following question is 655 units.
Explanation:
The formula to take out optimum order size =
[tex]\sqrt{} \frac{2 * annual demand * ordering cost per order}{holding cost}[/tex]
where the annual demand - $60,000 / $10
= 6000 units
Holding cost = $.70
Ordering cost per unit - $25
\sqrt{\frac{2\times 6000 \times \$25}{\$.70}}
= 655 units.