An appliance repair shop buys and uses about 50 fan motors annually. Annual hold

Question

An appliance repair shop buys and uses about 50 fan motors annually. Annual holding cost is $10 per motor, and ordering cost is $10 per order. Determine the economic order quantity. A) 10 B) 25 C) 30 D) 100 E) None of the above An appliance repair shop buys and uses about 50 fan motors annually. Annual holding cost is $10 per motor, and ordering cost is $10 per order. Determine the economic order quantity. A) 10 B) 25 C) 30 D) 100 E) None of the above A) 10 B) 25 C) 30 D) 100 E) None of the above

Explanation / Answer

A) 10

Economic order quantity = square root of [(2 x demand x ordering costs) ÷ carrying costs]

Demand = 50

Ordering Cost = 10$

Carrying cost = 10$

Economic order quantity = square root of [(2 x 50 x 10) ÷ 10]
= square root of (100)
= 10

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