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The John Equipment Company estimates its carrying cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48,000 units at a price of $4 per unit.
Required:
What is the most economical number of units to order?
How many orders should be placed in a year?
How often should an order be placed?

Answer :

The most economical number of units to order is 40and 48000 orders should be placed in a year.

EOQ formula: how is it created?

Annual demand, holding costs, and order costs are the main components of a formula that determines the economic Order Quantity (EOQ). With the help of this method, you can balance the amount of merchandise you sell with the cost of maintaining your inventory.

How do we determine the ordering level?

Correctly and efficiently calculating this level will ensure that your business places the exact right number of goods orders at the exact right moment, thus maximising income and minimising loss due to variables like wastage.

To know more about economic Order Quantity, click here- brainly.com/question/26814787

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