[amp_mcq option1=”600 units” option2=”750 units” option3=”1200 units” option4=”1250 units” correct=”option3″]
The correct answer is C. 1200 units.
The economic order quantity (EOQ) is the optimal quantity of an item to order at a time in order to minimize the total inventory costs. It is calculated by the following formula:
EOQ = รขยย(2DC)/H
where:
- D = annual demand in units
- C = cost of placing an order
- H = annual carrying cost per unit
In this case, we have:
- D = 6000 units
- C = 60
- H = 0.1*20 = 2
Substituting these values into the formula, we get:
EOQ = รขยย(2600060)/2 = 1200 units
The other options are incorrect because they do not minimize the total inventory costs. For example, option A (600 units) would result in higher ordering costs, while option B (750 units) would result in higher carrying costs.