Answer:
182; $1,566,350
Explanation:
Holding cost, H = $35 per unit
Ordering cost, S = $121 per order
Demand per year = 400 × 12
= 4,800
(a) Optimal order quantity(Q):
[tex]=\sqrt{\frac{2\times D\times S}{H} }[/tex]
[tex]=\sqrt{\frac{2\times 4,800\times 121}{35}}[/tex]
= 182.17
(b) Minimum/Total cost = Holding cost + Purchasing cost + Ordering cost
Total cost = (Q ÷ 2) × H + (p × Q) + (D ÷ Q) × S
As the EOQ is 181 -- in the range of 100-199 units, the purchasing cost/unit (p) = 325 $/unit
Total cost = (182 ÷ 2) × 35 + 4,800 × 325 + (4,800 ÷ 182) × 120
= $3,185 + $1,560,000 + $3,165
= $1,566,350 (approx)