Cheeseburger and Taco Company purchases 9,800 boxes of cheese each year. It costs $25 to place and ship each order and $8.92 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.

Calculate Economic Order Quantity.

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Economic Order Quantity is the order quantity that minimizes total holding and ordering costs for the year.

A = Demand for the year

Cp = Cost to place a single order

Ch = Cost to hold one unit inventory for a year

find the square root of the result to get the Economic order quantity

Answer =234.64 units per year

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