September 2016,no. 31b Economic Order Qty,

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February 9, 2017 at 2:57 pm #371757
ejoma
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Good day Sir, please in the above question, why was the Annual demand of $2.4m divided by 5.
February 9, 2017 at 3:54 pm #371778
John Moffat
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Because $2.4M is the total purchase cost in $’s.

Since each unit costs $5, it means they buy 2.4M/5 units.

It is units we need for the formula – not $’s !!!
February 13, 2017 at 9:18 am #372176
ejoma
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Thank you Sir.
February 13, 2017 at 9:49 am #372196
John Moffat
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You are welcome 🙂
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