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Diagnostic Supplies has expected sales of 84,100 units per year, carrying costs of \(5 per unit, and an ordering cost of \)10 per order.

a. What is the economic order quantity?

Short Answer

Expert verified

The economic order quantity is 580 units.

Step by step solution

01

Information provided in the question

Expected sales = 84,100 units

Carrying cost = $5 per unit

Ordering cost = $10 per order

02

Calculation of economic order quantity

EOQ=2×Sales×OrderingcostCarryingcost=2×84,100×$10$5=$1,682,000$5=580units

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Most popular questions from this chapter

In Problem 12, assume the term structure of interest rates becomes inverted, with short-term rates going to 11 percent and long-term rates 5 percentage points lower than short-term rates. If all other factors in the problem remain unchanged, what will earnings after taxes be?

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