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26. A small copy center uses five 500-sheet boxes of copy paper a week. Experience suggests that usage can be well approximated by a normal distribution with a mean of five boxes per week and a standard deviation of one-half box per week. Two weeks are required to fill an order for letterhead stationery. Ordering cost is $2, and annual holding cost is 20 cents per box.

Determine the economic order quantity, assuming a 52-week year.

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hyderali230

Answer:

Economic Order quantity is 73 units

Explanation:

Economic Order quantity is the optimal order quantity that minimizes the company total cost associated with ordering and holding.

Weekly Demands = 5 units

Annual Demand = 5 units × 52 = 260 units  

Carrying cost = $ 0.20 per box

Ordering cost = $2

Economic order Quantity = [tex]\sqrt{\frac{2 X Demand X Ordering Cost }{Holding Cost} }[/tex]

EOQ = [tex]\sqrt{\frac{2 X 260 X 2 }{0.2} }[/tex]

EOQ = 72.11

EOQ = 73 units

abiolataiwo2015

Based on the information given the economic order quantity, assuming a 52-week year is 72.

Using this formula

Economic order quantity=√2×Annual Demand× Ordering cost/Holding cost

Where:

Annual Demand = 5 units × 52 = 260 units  

Holding cost = 0.20 per box

Ordering cost = $2

Let plug in the formula

Economic order Quantity=√2×260×2/0.2

Economic order quantity=√1,040/0.2

Economic order quantity=√5,200

Economic order quantity=72

Inconclusion the economic order quantity, assuming a 52-week year is 72.

Learn more here:

https://brainly.com/question/12961315

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