Homework Answers
Annual demand (D) = 10000 units
Ordering cost (S) = 106
Holding cost (H) = 25% of product cost = 25% of $1158 = $289.5
Optimal order quantity = √(2DS/H)
= √[(2 × 10000 × 106)/289.5]
= √(2120000/289.5)
= √7322.970639
= 85.57 or rounded to 86 units
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