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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