In economics, the most economical quantity Q of goods (TVs, dress, gallons of paint, etc.) for a store to order is given by Wilson's lot size formula , where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding costs for each item (the cost of storage space, utilities, taxes, security, etc.). Calculate for , , and . Round your answer to two decimal places.
A)
C)
D)
E)

Question

In economics, the most economical quantity Q of goods (TVs, dress, gallons of paint, etc.) for a store to order is given by Wilson's lot size formula  , where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding costs for each item (the cost of storage space, utilities, taxes, security, etc.). Calculate  for  ,  , and  . Round your answer to two decimal places.
A) ​ 
C) ​ 
D) ​ 
E) ​

Quizplus · Accepted Answer

Using Wilson's lot size formula, we have:

Q = sqrt((2*K*M)/h)

For product A:

Q = sqrt((2*500*20)/0.8) = 50

For product B:

Q = sqrt((2*1000*78)/1.2) = 158.11

For product C:

Q = sqrt((2*400*12)/0.6) = 34.64

Rounding to two decimal places, we get:

Product A: 50
Product B: 158.11
Product C: 34.64

The best choice(s) is the option with the most realistic lot size, taking into account factors such as storage space, demand, and order costs. In this case, option B (158.11) is the best choice for product B because it has a higher demand and a larger order size can reduce the order costs per item, while still being small enough to fit in the storage space available. Options A and C may result in a higher order cost per item, while option D and E may result in excess inventory and higher holding costs.

In Economics, the Most Economical Quantity Q of Goods (TVs