Question: Rafael turns to Michelle and asks, What order quantity do you recommend we use for this product? Remember, we only ship in case quantities. To

Rafael turns to Michelle and asks, What order quantity do you recommend we use for this product? Remember, we only ship in case quantities.
To determine the order quantity for Listerine Cool Mint 250 ml, we need to consider the economic order quantity (EOQ) formula:
Economic Order Quantity = sqrt (2 x demand x ordering cost)= holding cost x 2 demand x ordering Cost)
We need to calculate the demand for one year:
The average weekly sales =12.3 units
No. of weeks in a year =52
Annual demand =Average weekly sales Number of weeks in a year=12.3\times 52=639.6
EOQ=2 x 639.6 x $6/0.25 x $2.50=110.82
Demand =639.6 units
Ordering Cost= $6
Holding Cost=$2.50
2 x 639.6 x 62.50=2,502x639.6x6
3837.62.50=2.503837.6
1535.04=1535.04
39.18
Listerine Cool Mint 250 ml is 39.18 units,

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