Answer :
The cost of a product is $5, the carrying cost rate is 20%, the yearly demand is 1000, the cost of processing an order is $45 and the economic order quantity is 300. (EOQ)
In order to reduce inventory costs like holding costs, shortfall charges, and order costs, a corporation should purchase the economic order quantity (EOQ), which is the ideal order quantity. Ford W. Harris created this production-scheduling model in 1913, and it has undergone numerous revisions since then. Demand, ordering, and holding costs are all taken into account in the formula as constants.
Given
Annual demand D = 1000
Ordering cost S = $45
Cost C = $5
Holding cost H = 20% = 0.2*5 = $1
EOQ=[tex]\sqrt{\frac{2DS}{H}}[/tex]
EOQ=[tex]\sqrt{\frac{2*1000*45}{1}}[/tex]
EOQ = 300
Finding the ideal quantity of a product to order is the aim of the EOQ formula. A corporation can reduce its expenses for purchasing, transporting, and storing units if this is accomplished. Businesses with extensive supply chains and significant variable costs utilize an algorithm in their computer software to generate EOQ, and the economic order quantity formula can be adjusted to determine various production levels or order intervals.
Learn more about economic order quantity here
https://brainly.com/question/16986815
#SPJ4