Answer:
a) 100 units
b) 2.5 order per year
c) 50 units
Explanation:
Given data:
demand 250 units
order cost is $20
holding cost $1
a) Economic order quantity [tex]EOQ = \sqrt{\frac{2\times demand \times order\ cost}{holding \ cost}}[/tex]
[tex]EOQ = \sqrt{\fac{2\times 250 \times 20}{1}} =100 units[/tex]
b) number of order for each year [tex]= \frac{annual/ demand}{EOQ}[/tex]
[tex]= \frac{250}{100} = 2.5[/tex]order/ year
c) average inventory [tex]= \frac{Q}{2} = \frac{100}{2} = 50 units[/tex]