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Economic Order Quantity EOQ - Harris Andler method
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Need help with a calculation regarding an economic order quantity calculation using Harris Andler's formula:

EOQ = x = √ (2 * D * S) / H

where:

D = annual demand in units S = order cost H = holding costs per unit and year

The following information is given:

  • Sales volume is 36'500 loaves of bread/year
  • each loaf requires 700 g of flour
  • the flour is delivered in 25 kg sacks, costing 40 USD each
  • for orders of 100 sacks or more, there is a 15% discount on sales price
  • transport costs are 150 USD per delivery
  • holding costs are 2 USD per sack and month

The textbook solution states, the EOQ is 114 sacks per order. I'm unable to arrive at 114.

My assumptions: - To me D is 1022 units as (((36500*700)/1000)/25). - To me S is either 40, 150, or 190. - H is 2 USD

No matter in which combination I insert the numbers, the result is never 114.

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2 years ago