question archive Fischer's Furniture sells 2,400 sofas a year at an average price per sofa of $1,250
Fischer's Furniture sells 2,400 sofas a year at an average price per sofa of $1,250
Subject:FinancePrice:1.87 Bought7
Fischer's Furniture sells 2,400 sofas a year at an average price per sofa of $1,250. The carrying cost per unit is $11.60. The company orders 80 sofas at a time and has a fixed order cost of $52 per order. The sofas are sold out before they are restocked. What is the economic order quantity?
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Answer:
D = Demand/year = 2400
O = Order cost = $52/order
C = Carrying cost = $11.60
EOQ = √(2DO/C) = √(2*2400*52/11.6) = 146.69 units ( 147 units )
