If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?


Multiple Choice

5,060


2,004


2,133


2,320


1,866

To find the optimal order quantity using the **Economic Order Quantity (EOQ)** formula in a fixed-order quantity model, we can use the following formula:

\[
EOQ = \sqrt{\frac{{2DS}}{H}}
\]

Where:
- $ D $ = Annual demand (35,000 units)
- $ S $ = Ordering cost per order ($50)
- $ H $ = Holding cost per unit per year ($0.65)

### Plugging in the values:

\[
EOQ = \sqrt{\frac{{2 \times 35000 \times 50}}{0.65}} = \sqrt{\frac{{3,500,000}}{0.65}} = \sqrt{5,384,615.38}
\]

\[
EOQ \approx 2,320
\]

### Conclusion:
The optimal order quantity is **2,320**.

Do you need further details or have any questions?

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Here are 5 related questions to expand on this topic:
1. How does a higher ordering cost affect the EOQ?
2. What happens to EOQ if the holding cost per unit increases?
3. Can EOQ be applied in a system where demand fluctuates significantly?
4. How does a change in annual demand influence EOQ?
5. What is the impact of lead time on EOQ?

**Tip**: Reducing either ordering or holding costs can lower the EOQ, which decreases total inventory-related costs.

If annual demand is 35,000 units, the ordering cost is $50 per order, and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model?

Learn how to calculate the optimal order quantity using the Economic Order Quantity (EOQ) formula with a detailed step-by-step solution. The example includes an annual demand of 35,000 units, a $50 ordering cost, and a $0.65 holding cost per unit per year. Ideal for students studying supply chain management and business operations.

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