Question

ABC Company sells 2,055 chairs a year at an average price per chair of $164. The...

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?

Homework Answers

Answer #1
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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