The question provided involves calculating the Economic Order Quantity (EOQ), which is a common formula used in inventory management to determine the optimal order quantity that minimizes total inventory costs, such as ordering and holding costs.

The EOQ formula is:

$EOQ = \sqrt{\frac{2DS}{H}}$

Where:

• $D$ = Demand (units per period),
• $S$ = Ordering cost per order,
• $H$ = Holding cost per unit per period.

From the image:

• $D = 7,800$ units per month,
• $S = 44$ dollars per order,
• $H = 2$ dollars per unit per month.

Substitute these values into the EOQ formula:

$EOQ = \sqrt{\frac{2 \times 7,800 \times 44}{2}} = \sqrt{\frac{686,400}{2}} = \sqrt{343,200} \approx 586$

Thus, the Economic Order Quantity (EOQ) is approximately 586 units.

Would you like more details or have any questions about this?

Here are some follow-up questions to deepen your understanding:

1. What impact would increasing the ordering cost ($S$) have on the EOQ?
2. How does changing the holding cost ($H$) affect the EOQ calculation?
3. What are the main benefits of using the EOQ model in inventory management?
4. How would seasonal demand variations influence the EOQ model?
5. Could EOQ still be effective if the costs or demand are uncertain?

Tip: When applying the EOQ formula, ensure that all units (e.g., time period for demand and holding costs) are consistent throughout the calculation.