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Answer :
Final answer:
The economic order quantity (EOQ) for grinders is approximately 107 units.
Explanation:
The economic order quantity (EOQ) is a formula used to determine the optimal order quantity for a product that minimizes the total annual cost of ordering and carrying inventory. The formula for calculating EOQ is:
EOQ = √(2 * d * S / H)- d = annual demand
- S = cost per order
- H = annual holding cost per unit
In this case, the annual demand for grinders is 2400 units, the cost per order is $375, and the annual holding cost per unit is $125. Plugging in these values into the formula, we get:
EOQ = √(2 * 2400 * 375 / 125) = √(2 * 720000 / 125) = √(1440000 / 125) = √11520 = 107.22Therefore, the economic order quantity for grinders is approximately 107 units.
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