Q* = Economic Order Quantity

D = Average Annual Demand

S = Ordering Cost

h = Annual Holding Cost (%)

C = Cost of the product

Q* = squareroot(DS2/hC) or SQRT(DS2/hC)

The XYZ Company has an assembly plant in Cincinnati and its parts plant in Indianapolis. Parts are transported from Indianapolis to Cincinnati using trucks. Each shipment costs $100. The Cincinnati plant assembles and sells 300 finished products each day and operates 5 days a week and 50 weeks a year. Part #456 costs $50 and XYZ Company incurs a holding cost of 20 percent per year. How many of parts should XYZ Company put in each shipment?

Select one:

a. 1,225

b. 2,450

c. 1,650

d. 845