Answer:
Annual demand(D) = 12,000 units
Ordering cost(Co) = $25
Holding cost(H) = $15
EOQ = 2DCo/H
EOQ =√ 2 x 12,000 x $25
15
EOQ = 200 units
Explanation:
EOQ is equal to the square root of 2 multiplied by annual demand and ordering cost divided by holding cost.
The Economic Order Quantity lot size will be 200 units.
EOQ is the optimal order quantity of a company that minimizes total cost of the company related to the inventory like ordering, etc.
According to the question,
Given that,
Demand = 12000 per unit,
Holding Cost = 15 per unit,
Setup cost = 25 per unit.
Economic order quantity = ?
Formula for computing Economic Order Quantity (EOQ):
[tex]\begin{aligned}EOQ = \sqrt{\dfrac{2(\text{Setup Cost})(\text{Demand})}{\text{Holding Cost}} \end{aligned}[/tex]
Now,
Put the values in the above formula:
[tex]\begin{aligned}EOQ &= \sqrt{\dfrac{2(25)(12,000)}{15}}\\&=\sqrt{40,000}\\&=200\;\text{units} \end{aligned}[/tex]
Hence, the economic order quantity lot size is 200 units.
For more details about EOQ, refer the link given below:
https://brainly.com/question/9068415
