Question

Use the following information to determine the implied fixed inventory ordering cost: EOQ = 83.67 units...

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

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Homework Answers

Answer #1

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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