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Annual demand for squash racquets is 50,000 units, and carrying costs amount to $2 per unit
Annual demand for squash racquets is 50,000 units, and carrying costs amount to $2 per
unit. Order costs for the company amount to $5. The optimum order quantity in units
for squash racquets is ?
Expert Solution
Computation of the optimum order quantity in units:-
Optimum order quantity = (2 * Annual demand * Order cost / Carrying cost per unit) ^ (1/2)
= (2 * 50,000 * $5 / $2) ^ (1/2)
= 250,000 ^ (1/2)
= 500 units
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