Basic EOQ. This type of problem can be recognized when annual demand (D), ordering cost (S), and holding or carrying cost per unit (H) are given.
A toy manufacturer uses approximately 32,000 silicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $3 per chip, and ordering cost is $120.
Determine
a. The optimal order quantity.
b. The number of workdays in an order cycle.