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Solve in English

ScanSolve AI Tutor · Accepted Answer

To calculate the Economic Order Quantity (EOQ), we will use the Wilson formula.

Given values:

The EOQ formula is:

EOQ = \sqrt{\frac{2DS}{H}}

Where:

Calculate the annual demand (D).
The average monthly consumption is 50,000 units.
$D = 50\,000 \text{ units/month} \times 12 \text{ months/year} = 600\,000 \text{ units/year}$
Calculate the annual holding cost per unit (H).
The holding cost is 15% of the unit purchase price (20,000).
$H = 0.15 \times 20\,000 = 3\,000 \text{ per unit per year}$
Apply the EOQ formula.
Substitute the values of D, S, and H into the formula.
$EOQ = \sqrt{\frac{2 \times 600\,000 \times 40\,000}{3\,000}}$ $EOQ = \sqrt{\frac{48\,000\,000\,000}{3\,000}}$ $EOQ = \sqrt{16\,000\,000}$ $EOQ = 4\,000$
The Economic Order Quantity is 4,000 units.

$\text{EOQ} = 4\,000 \text{ units}$

Answer