Chod co. uses an eoq model to determine its purchase quantities for the year. the following information is available: annual demand 25,000 units of material;
cost of placing an order $50;
cost of carrying the material in inventory $10 per unit.
the material costs $100 per unit.
1. using the eoq formula, what is the order quantity (round to nearest whole unit)?
a. 500 units
b. 71 units
c. 354 units
d. 158 units

A. 500 units

Explanation:

The computation of the economic order quantity is shown below:

=

=

= 500 units

While computing the economic order quantity we take the annual demand, ordering cost and the carrying cost in the computation part. It minimizes the ordering cost and the carrying cost. At this level, these two costs are equal

All other information which is given is not relevant. Hence, ignored it

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