Business, 27.12.2019 00:31 HOTaco1837

Home sweet home company orders plywood from laforge. home sweet home has an ordering cost of $45. carrying cost is 20%, and annual demand is 100 sheets. what do you recommend?

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Answer from: 2000000000000005

Annual demand (D) = 100 sheets

Ordering cost (Co) = $45

Unit cost = $10 (assumed)

Holding cost (H)= 20% x $10 = $2

This is an incomplete question. Unit cost was omitted in the question. Thus, $10 is assumed.

EOQ = 2DCo

EOQ = 2 x 100 x $45

EOQ = 67 units

Explanation:

EOQ is the square root of 2 multiplied annual demand and ordering cost per order divided by holding cost per item per annum. Holding cost is usually a function of unit cost. The unit cost was not given. Thus, a unit of $10 is assumed. Holding cost is 20% of unit cost.

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