Answer:EOQ=200
Explanation:
The model of inventory management that identifies the optimum number of items to order to minimize the costs of managing them is called the economic order quantity (EOQ) model123. The EOQ model is used to calculate the ideal order quantity that minimizes the total inventory costs, which include ordering costs and holding costs2. The formula for EOQ is:
EOQ=H2×S×D
where:
S = Setup costs (per order, generally including shipping and handling)
D = Demand rate (quantity sold per year)
H = Holding costs (per year, per unit)
For example, if a company has a setup cost of $50 per order, a demand rate of 1000 units per year, and a holding cost of $5 per unit per year, then the EOQ is:
EOQ=52×50×1000
EOQ=200
This means that the company should order 200 units of inventory each time to minimize its total inventory costs.