A product whose eoq is 40 units experiences an increase in the annual holding cost from $10 per unit to $90 per unit. The revised eoq is?

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04-08-2022
Business

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A product whose eoq is 40 units experiences an increase in the annual holding cost from $10 per unit to $90 per unit. The revised eoq is?

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rafikiedu04 rafikiedu04 · Answer 1 · 2022-08-15T01:32:12-04:00

A product whose EOQ is 40 units experiences an increase in the annual holding cost from $10 per unit to $90 per unit. The revised EOQ is nine times as large.

The Economic Order Quantity (EOQ) is the ideal order quantity that a business should purchase to minimize inventory costs such as inventory holding costs, out-of-stock costs, and order costs.

Economic Order Quantity (also known as Economic Purchase Quantity) is the order quantity that minimizes the total storage and ordering costs in inventory management. One of the oldest classic production planning models. Wikipedia

Economic Order Quantity or EOQ, also known as "Optimal Lot Size", is designed to help businesses determine the optimal order quantity to minimize logistics costs, storage space, shortages, and excess inventory costs calculated. The formula is: EOQ = [2(setup cost)(demand rate)] / square root of holding cost.

Learn more about EOQ here

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