Accounting for Materials – EBQ

Hello,

I am working from a BPP text book and using Opentuition notes/ lectures which are fantastic! Thank you!

I am a bit perplexed about an answer in the BPP textbook, however, and wondered if you could help. The question in a nutshell is:

Company rate of production is 4000 units a week, Demand for component is 2000 units a week, Set-up costs for each production run are $50, and cost of holding one unit of inventory is $0.001 a week.

Calculate the Economic Production Run

I have calculated the EBQ as:

(sq rt) 2x50x2000/0.001(1-2000/4000)

So,

200,000/5 = 40,000
(sq rt) 40,000 = 200

I believe this to be correct, however, the answer given in the book is “20,000 units (giving an inventory cycle of 10 weeks)”. I do not understand where the 20,000 comes from or what I am to do in order to calculate the economic production run once I have the EBQ with no further information.

Could you please help to explain this answer? Many thanks!!