ABC Company sells 2,055 chairs a year at an average price per chair of $164. The carrying cost per unit is $33.59. The company orders 500 chairs at a time and has a fixed order cost of $79 per order. The chairs are sold out before they are restocked. What is the economic order quantity?
Economic Order Quantity | Square root of (2*Annual Demand*Cost of placing 1 order/Cost of handing per unit per year) |
Annual Demand | 2055 |
Cost of placing 1 order | 79 |
Storage cost | 33.59 |
Putting all these factors in EOQ formula | =((2*2055*79)/33.59))^1/2 |
Economic Order quantity | 98.32 |
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