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F2 members please coz am getting wrong somewhere

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F2 members please coz am getting wrong somewhere

The demand for a product is 12500 units for a three month period. Each unit has a purchase price of $15 and ordering costs are $20per order placed. The annual holding cost of one unit of product is 10% of its purchase price. What is the economic order quantity?

April 25th 2018 AN ACCA USER 190 Points 1 Flag

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+3 Votes

EOQ = square root of 2(CoD)/Ch
We have : Co = 20
D = 12,500 * 4 (for one year period) = 50,000
Ch = 10% of price = 0.1 * 15 = 1.5

Then, EoQ = square root of 22050,000/1.5 = 1,154.7

June 19th 2018 AN ACCA USER 200 Points
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