EOQ is $9,798.
Given:
Annual demand (D)=10,000 units.
Holding cost (H) = 0.25× 15
Order cost (O) = $80
EOQ is to be computed.
Economic order quantity (EOQ) is a computation that businesses use to determine their optimal order size, allowing them to satisfy demand while without overpaying. Inventory managers compute EOQ in order to reduce holding costs and surplus inventory.
The formula to compute the EOQ is given as:
EOQ=[tex]\sqrt{\frac{2*D*O}{H} }[/tex]
[tex]=\sqrt{\frac{2*10000*80}{3.75} } \\=653.20[/tex]
Converting in dollars =653.2×15
=$9,798
Hence, the EOQ is $9,798.
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