1. The local Toyota dealer must decide how many tires of a particular type to order...
1. The local Toyota dealer must decide how many tires of a particular type to order for replacement orders. This type of tire costs $25 each. The carrying charge is 10% per year and the ordering cost is $20 per order. Assume that the annual demand of the tires is 40000 units, the EOQ is:
A. 200 units
B. 219 units
C. 400 units
D. 800 units
Homework Answers
Ordering cost (S) = $20 per order
Annual quantity demanded (D) = 40,000 units
Holding cost (H) = 25 x 10%
= $2.5
Economic order quantity = 
(2SD)/H
=
(2 X 20 X 40,000)/2.5
=
640,000/2.5
= 800 units
Kindly comment if you need further assistance. Thanks‼!
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