The annual holding cost for each airplane the cost
lOMoARcPSD24389855
Using the continuous review system, what is the economic order quantity (EOQ. that Jon should use as the order quantity for this item? Select the closest number.



 
 
 

EXPLANATION
Gather data.
D = Annual Demand
D = Demand per week × # of weeks operating in a year D = 50 × 52
D = 2,600S = Order Cost (Cost per order is already given) S = $30
2 × 𝐷 × 𝑆
𝐸𝑂𝑄 = �
𝐻
�  2 × 2600 × 30  

𝐸𝑂𝑄 =  10  
𝐸𝑂𝑄 = �  156000  

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lOMoARcPSD24389855
 
 




Now, calculate the Reorder Point.
Reorder Point = D × T + Safety Stock
Reorder Point = (50 × 4) + 7
Reorder Point = 200 + 7
Reorder Point = 207Answer: Option 4  207 airplanes