Figure 8-3. Martin Company uses 625 units of a part each year.The cost of placing one order is $8; the cost of carrying one unit in inventory for a year is $4.
Refer to Figure 8-3.What is the EOQ for Martin?
A)100
B)50
C)45
D)30
E)20

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is √((2DS)/H), where D is the demand (625 units), S is the ordering cost ($8), and H is the holding cost ($4). Plugging in these values, EOQ = √((2*625*8)/4) = √2500 = 50.