# Economic Order Quantity - EOQ

Annual demand: 2500

Holding cost per bracket per year: $1.50

Order cost per order: $18.75

Lead time: 2 days

Working days per year: 250

Please answer the following questions:

A. What is the Economic Order Quantity (EOQ)?

B. Given the EOQ: What is the annual inventory holding cost?

C. Given the EOQ: What would be the average inventory?

D. Given the EOQ: How many orders would be made each year?

E. Given the EOQ: What would be the annual order cost?

F. Given the EOQ: What is the total annual cost of managing the inventory?

G. What is the time between orders?

H. What is the reorder point?

https://brainmass.com/business/accounting/economic-order-quantity-eoq-inventory-210893

#### Solution Preview

Below are the answers to the given questions:

A. What is the Economic order quantity (EOQ)?

= sqrt (2 x demand x ordering cost / holding cost)

= sqt ( 2 x 2500 x 18.75 / 1.5)

= 250 units.

B. Given the EOQ: What is the annual inventory holding cost? ...

#### Solution Summary

The solution defines Economic Order Quantity (EOQ) and provides a step-by-step explanation given the EOQ to each of the inventory questions listed in the long description.