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In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:

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ayokenny2001

Answer:

20

Explanation:

The formula for Economic order quantity ( EOQ ) = √2DS/H,

Where,

D annual demand = 40 units

S Ordering cost = $5

H Holding cost = $1

Hence ,

EOQ = √ 2 × 40 units × $5 / 1$

= √ $400 / $1

= 20

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