Given:
Annual demand = 410 units
Ordering cost = $41
Holding cost = $5 unit per year
To find:
Number of units to be ordered each time an order is placed
Solution:
On calculating the number of units,
[tex]\Rightarrow \sqrt{(\frac{2(390)(38)}{5})} \rightarrow\sqrt{\frac{780\times38}{5}}= 76.99[/tex]
Therefore, to minimize the total cost, approximately 77 units should be ordered each time an order is placed.
