Homework Answers
For the second offer:
Price = $8
Order processing cost (S) = $400
Demand (D) = 100 per month = 1200 units per year
Annual holding cost (H) = 22% of the price = 8*0.22 = $1.76
We know that,
EOQ = 
Here,
D = 1200
S = $400
H = $1.76
Putting everything in formula
EOQ = √(2*1200*400/1.76) = √(960000/1.76) = √(545454.5455) = 738.55
No material can be ordered in fraction.
Hence the EOQ is = 739
Answer is: (B) 739
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