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What is the economic order quantity

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Question - Arizona Health Services (AHS), a large hospital system, dispenses 250,000 bottles of brand name pharmaceuticals annually in one of its hospitals (assume a constant daily demand). The optimal safety stock, which is on hand initially, is 1,000 bottles. Each bottle costs $10, the holding cost is $.10/unit, and the cost of placing an order with the supplier is $175. Assume an interest rate of 5% and a lag time of 5 days.

Required - What is the economic order quantity?

A) 1,000

B) 2,475

C) 4,950

D) 2,672

Reference no: EM132619713

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