For a particular item the usage is 2000 units per year, the ordering cost is $10, the inventory carrying cost is 20% and the unit cost is $5. The economic order quantity is:
A) 20 units
B) 200 units
C) 2000 units
D) 400 units
E) 4000 units

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) is calculated using the formula: EOQ = sqrt((2 * Demand * Ordering Cost) / Carrying Cost). Substituting the given values: EOQ = sqrt((2 * 2000 * 10) / (0.20 * 5)) = sqrt(4000) = 200 units.

For a Particular Item the Usage Is 2000 Units Per