Our company purchases microprocessors for use in our products and we purchase 2.5 million microprocessors each year.
Each time we place an order, it costs us $1,250 for all the paperwork, labor, postage, etc.
Each microprocessor costs us $2.53.
Our inventory holding cost is $0.557 per microprocessor
Assume that demand takes place at a constant rate.
What is the EOQ? How many orders will be placed each year? How much time will elapse between the placement of orders?