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    Economic Order Quantity

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    ABC Corp. uses 20,000 half inch PVC tubes during a calendar quarter. Ordering costs are $180 per order and carrying costs are $6 per tube per quarter. The economic order quantity is?

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    Solution Preview

    The economic order quantity (EOQ) is given by following formula

    EOQ = Square root of (2*Annual demand*Ordering cost/Annual inventory carrying cost per unit

    In the above example demand is given per quarter and inventory carrying cost is given as per tube per ...

    Solution Summary

    The solution shows calculation of Economic Order Quantity.