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) is calculated using the formula: EOQ = sqrt((2DS)/H), where D is the demand (625 units), S is the ordering cost ($8), and H is the holding cost ($4). Plugging in the values, EOQ = sqrt((2*625*8)/4) = sqrt(2500) = 50.

Figure 8-3 Martin Company Uses 625 Units of a Part