Use the following information to determine the implied fixed inventory ordering cost:
EOQ = 83.67 units
Demand = 350 units
Holding Costs = $3
A. $0.36
B. $12.50
C. $25.00
D. $30.0
PLEASE SHOW YOUR WORK
Formula for EOQ:-
where, A = Annual Demand = 350 units
O = Ordering Costs
C = Carrying cost or Holding Costs per unit = $3
EOQ = 83.67 units
Squaring Both sides,
7000.6689 = 700*O/3
O = $30
So, the implied fixed inventory ordering cost is $30
Option D
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