Answer: EOQ = 575.38 units ≈ 575 units
Annual holding cost =$862.5 ≈ $863
annual ordering cost=$863.65 ≈ $864
Explanation:
a)the EOQ for the workbooks=[tex]\sqrt{ 2 X Demand x ordering cost / holding cost}[/tex]
= [tex]\sqrt{2 x 19,100 x 26 / 3}[/tex] = [tex]\sqrt{331,066.667}[/tex]
= 575.38 units ≈ 575 units
b)the annual holding costs for the workbooks
Annual holding cost = Economic order quantity x Holding cost /2
= (575 x 3)/2=$862.5 ≈ $863
c) the annual ordering costs = Demand X Ordering cost/ EOQ
= 19,100 x 26/575
=$863.65 ≈ $864
