Answer:
240
Explanation:
Data provided in the question:
Annual demand, D = 12,000 units
Ordering cost, C = $6 per order
Holding cost = $2.50 per unit per year
Now,
Optimal order quantity = [tex]\sqrt{\frac{2\times \text{Annual demand}\times\text{Ordering cost}}{\text {Holding cost}}[/tex]
on substituting the respective values, we get
or
Optimal order quantity = [tex]\sqrt{\frac{2\times \text{12,000}\times\text{6}}{\text {2.50}}[/tex]
or
Optimal order quantity = √57,600
or
Optimal order quantity = 240
