A service garage uses 1000 boxes of cleaning cloths a year. The boxes cost $6 each....
A service garage uses 1000 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on an annual basis. What’s the economic order quantity?
Homework Answers
Annual demand = 1000 Boxes
Cost per Box = $6
Ordering cost = $3
Holding Cost = $6 x 0.10 = $0.60 per box per year
Economic Order Quantity = EOQ = 
(2 x Annual
Demand x Ordering Cost) / Holding Cost
= (2 x 1000 x
3) / 0.60
= 100 Boxes
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