Respuesta :
Answer:
A. 566 pounds
Explanation:
Given: Demand for rice is very consistent= 200 pounds per month.
Cost of rice per order= $50 per order.
Rice cost= $5 per pound.
Carrying charge= 15%
EOQ: Economic order quantity (EOQ) is the number of units that company should include in their inventory with each order to reduce cost of inventory.
Now, calculating EOQ.
Formula; EOQ= [tex]\sqrt{\frac{2DP}{C} }[/tex]
D= Demand in units for specified period.
P= relevant ordering costs per order.
C= Relevant carrying cost of one unit in stock for the time period used for D.
EOQ= [tex]\sqrt{\frac{2\times (50)(200\times 12)}{5\times 15\%} }[/tex]
⇒ EOQ= [tex]\sqrt{\frac{2(50)(2400)}{5\times (0.15)} }[/tex]
Opening parenthesis
⇒ EOQ= [tex]\sqrt{\frac{240000}{0.75} }[/tex]
⇒ EOQ= [tex]\sqrt{320000}[/tex]
∴ EOQ= [tex]565.68\ pound \approx 566\ pounds[/tex]
Hence, Economic order quantity is 566 pounds.
