What is the EOQ for an item with an annual demand of 2,000 units and a cost per order of $75?

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 =