document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1181263>Question 1181263</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A manufacturer uses 600 units of a product per annum. The variable cost of placing an order<BR>\n" );
document.write( "amounts toRs. 70.00 and the variable cost of holding one unit for a year amounts toRs. 8.40. The<BR>\n" );
document.write( "optimal recommended order size (to the nearest unit) to minimise associated costs is? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #850065 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1959)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=850065\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Here's how to calculate the optimal order size using the Economic Order Quantity (EOQ) formula:\r<BR>\n" );
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document.write( "**Understanding EOQ**\r<BR>\n" );
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document.write( "The Economic Order Quantity (EOQ) is a model that calculates the optimal order quantity for inventory that minimizes total inventory costs (which include ordering costs and holding costs).\r<BR>\n" );
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document.write( "**Formula**\r<BR>\n" );
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document.write( "EOQ = √(2 * D * O / H)\r<BR>\n" );
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document.write( "Where:\r<BR>\n" );
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document.write( "* D = Annual demand (units)<BR>\n" );
document.write( "* O = Ordering cost per order<BR>\n" );
document.write( "* H = Holding cost per unit per year\r<BR>\n" );
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document.write( "**Calculation**\r<BR>\n" );
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document.write( "1. **Plug in the values:**<BR>\n" );
document.write( "   * D = 600 units<BR>\n" );
document.write( "   * O = Rs. 70.00<BR>\n" );
document.write( "   * H = Rs. 8.40\r<BR>\n" );
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document.write( "   EOQ = √(2 * 600 * 70 / 8.40)\r<BR>\n" );
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document.write( "2. **Simplify:**<BR>\n" );
document.write( "   EOQ = √(84000 / 8.40)<BR>\n" );
document.write( "   EOQ = √10000<BR>\n" );
document.write( "   EOQ = 100\r<BR>\n" );
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document.write( "**Answer**\r<BR>\n" );
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document.write( "The optimal recommended order size to minimize associated costs is 100 units.<BR>\n" );
document.write( " </SPAN>\n" );
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