Question: The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has

The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has an estimated annual demand of 8,000 units. Talbot estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year.

1. Use the information in the scenario above. What is the economic order quantity for the XO-01?

2. How many times per year must Talbot order the XO-01 when orders are placed using the EOQ quantity?

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