Matthew Liotine's Dream Store sells water beds and assorted supplies.
Matthew Liotine's Dream Store sells water beds and assorted supplies. His best-selling bed has an annual demand of 390 units. Ordering cost is $49; holding cost is $5 per unit per year.
a) To minimize the total cost, how many units should be ordered each time an order is placed?
Homework Answers
Annual Demand (D)= 390 units
Ordering cost(S) = $49?
Holding cost (H) = $5 per unit per year
So Economic order quantity should be ordered i order to minimize the total cost.
EOQ = ?(2DS/H)
= ?(2*390*49/5)
87.42
88 units should be ordered.
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