William beville’s computer training school, in richmond, stocks workbooks with the following characteristics:

demand d = 19,500 units/year

ordering cost s = $25/order

holding cost h = $4/unit/year

a) calculate the eoq for the workbooks.
b) what are the annual holding costs for the workbooks?
c) what are the annual ordering costs?

(a) 494 units

(b) $988

(c) $1,000

Explanation:

Demand (D) = 19,500 units/year

Ordering cost (S) = $25/order

Holding cost (H) = $4/unit/year

a) The EOQ is given by the following relationship:

The EOQ, rounded to the nearest whole unit, is 494

b) Annual holding costs are given by:

c) Annual ordering costs are defined by the number of orders required multiplied by the cost per order:

the correct answer is b.)