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Billy Ray is selling Skull Candy headphones on Ebay and orders his inventory from a wholesaler...

Billy Ray is selling Skull Candy headphones on Ebay and orders his inventory from a wholesaler in Los Angeles.


These are the facts:

Demand is 10,000 per unit a year

Order costs are $40 per order

Carrying costs are .20 or 20%

Value per unit. is $100


Questions:

a. What is the Economic Order Quantity? (EOQ)

b. What is the total of carrying costs and order costs at the EOQ order amount?

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