Economic Order Quantity

A local bakery uses 36,000 cake boxes annually. The carrying cost per box is $0.50 per year, and the ordering cost is $25 per order. What is the Economic Order Quantity (EOQ) for the bakery?

• 200 boxes

• 600 boxes

• 1,200 boxes

• 2,000 boxes

If the ordering cost increases while all other factors remain the same, the EOQ will increase.

• True

• False

A factory has an annual demand of 24,000 units, operates 300 days a year, and places an order every 30 days. What is the daily demand rate for this factory?

• 800 units/day

• 900 units/day

• 90 units/day

• 80 units/day

A company incurs a setup cost of $50 per order and an annual carrying cost of $2 per unit. If the EOQ is calculated to be 500 units, what is the total annual inventory cost?

• $250

• $500

• $750

• $1000

A company’s annual demand for a product is 20,000 units, with a setup cost of $40 per order and an EOQ of 1,000 units. If the company operates 250 days a year, how many orders does the company place per year?

• 10 orders

• 20 orders

• 30 orders

• 40 orders