Per order to facilitate shipping and handling

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Reference no: EM132303689

Amazon sells 12,000 PC’s every month. Each PC costs $600 and Amazon has a holding cost of 25% (annual holding cost percentage) of the item’s value. The cost per order (fixed cost per order) is $750.00

1. What is the EOQ for this product?

2. If Amazon uses the EOQ above as its order quantity then how many orders will it place per year for this item?

3. Amazon would like the order size for this product to be 1000 units per order to facilitate shipping and handling. What would the fixed cost per order (currently $750) need to be to justify an EOQ of 1000?

Reference no: EM132303689

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