Economic Order Quantity
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Nowlin Pipe & Steel has projected sales of 72,000 pipes this year, an ordering
cost of $6 per order, and carrying costs of $2.40 per pipe.
a. What is the economic ordering quantity?
b. How many orders will be placed during the year?
c. What will the average inventory be?
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Solution Summary
The solution explains how to use the EOQ to calculate the quantity, number of orders and the average inventory for Nowlin Pipe and Steel
Solution Preview
The EOQ formula is SQRT (2 X ordering cost X annual usage)/annual carrying cost). If you substitute these figures in the ...
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