1) A bookstore has an annual demand for 28,000 copies of a best-selling book. It
ID: 2876230 • Letter: 1
Question
1) A bookstore has an annual demand for 28,000 copies of a best-selling book. It costs $0.50 to store one copy for one year, and it costs $65 to place an order. Find the optimum number of copies per order. 1) _________ A) 3816 copies B) 2698 copies C) 3257 copies D) 2428 copies
1) A bookstore has an annual demand for 28,000 copies of a best-selling book. It costs $0.50 to store one copy for one year, and it costs $65 to place an order. Find the optimum number of copies per order. 1) _________ A) 3816 copies B) 2698 copies C) 3257 copies D) 2428 copies
1) A bookstore has an annual demand for 28,000 copies of a best-selling book. It costs $0.50 to store one copy for one year, and it costs $65 to place an order. Find the optimum number of copies per order. 1) _________ A) 3816 copies B) 2698 copies C) 3257 copies D) 2428 copies
Explanation / Answer
D = 28,000 copies
Storage cost (SC) = $0.50 per copy / per year
Ordering cost (OC) = $65
Economic order quantity (EOQ) is the order quantity that minimizes the total holding costs and ordering costs.
EOQ = sqrt(2*D*OC/SC)
EOQ = sqrt(2*28,000*65/0.50) = 2698.15
Or 2698 copies
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