What is the most economical order quantity

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Reference no: EM131118405

A firm machinery manufacture requires 7,000 air filters per year as replacement parts on mechanical harvesters. The filters cost $3 each and are stored in rented facilities at a cost of $.35 per unit-year, with storage requirements based upon the maximum number of units purchased at one time, Q. The interest Ccarrying) costs, based upon average inventory, are $.30 per unit-year, and the firm uses $35 per order as the ordering cost. What is the most economical order quantity?

Reference no: EM131118405

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