Question

Rajesh Indian Market (RIM) is open 12 months out of the year. At RIM, the demand...

Rajesh Indian Market (RIM) is open 12 months out of the year. At RIM, the demand for rice is very consistent 200 pounds per month. RIM orders the rice from a distributor in India at an ordering cost of $50 per order. Rice costs $5 per pound, and annual carrying charge is 15%. Answer questions 3-7 below based on this information.

3. The EOQ is? (round up to the nearest whole number)
a. 566 pounds
b. 164 pounds
c. 163 pounds
d. 26667 pounds
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Answer #1

EOQ=

the square root of:

[(2 times annual usage in units times order cost)

divided by annual carrying cost per unit]

so: 2*2400*$50=240000 divided by .75             (5*15%=.75)

=320000

don't forget to take the square root!

√320000=566 pounds

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