Answer:
Optimal order quantity = 24,980(Approx)
Explanation:
Given:
Weekly demand = 1,500 units
Standard deviation = 800 units
Each planter cost = $10
Holding cost = 25%
Transportation cost = $10,000 per order
Total weeks = 52
Computation of optimal order quantity:
Optimal order quantity = [tex]\sqrt{\frac{2DS}{h} }[/tex]
Where, D = Weekly demand × Total weeks
D = 1,500 units × 52 = 78,000
S = $10,000
h = $10 × 25% = $2.5
Optimal order quantity = [tex]\sqrt{\frac{2(78,000)(10,000)}{2.5} }[/tex]
Optimal order quantity = 24,979.992
Optimal order quantity = 24,980(Approx)
