University Of Central Florida (UCF) MAR3203 Supply Chain And Operations Management Midterm Practice Exam

To calculate the Economic Order Quantity (EOQ), which is the ideal order quantity a company should purchase to minimize inventory costs, you can use the following formula: \[ EOQ = \sqrt{\frac{2DS}{H}} \] where: - \( D \) is the annual demand, - \( S \) is the ordering cost per order, and - \( H \) is the holding cost per unit per year. In this scenario, we have an annual demand (\( D \)) of 2,000 units, and the cost per order (\( S \)) is $75. However, the holding cost per unit (\( H \)) is not provided in this question. For EOQ calculations, it is typically necessary to have all three factors present, and if \( H \) is assumed to be a specific value (like $1 for simplicity), the EOQ can be determined: Assuming a holding cost \( H \) of $1: 1. Plugging in the numbers: \[ EOQ = \sqrt{\frac{2 \times 2000 \times 75}{1}} \] \[ EOQ = \sqrt{\frac{300000}{1}} \] \[ EOQ =