Answer:
Optimal EPQ quantity = 2633
Explanation:
Annual demand = D = 200/ week x 52 weeks = 10400 units
Cost to place an order = Co = $2
Weekly inventory carrying cost = I = $0.01
Weekly demand = d = 200 units
Weekly production rate = p = 500
Optimal EPQ quantity = Square root ( 2 x D x C/I x ( p/p-d))
= Square root ( 2 x 10400 x 2/0.01x ( 500 /500 – 200)
= Square root ( 2 x 10400 x 200 x 500/300)
= 2633.12 ( 2633 rounded to nearest whole number )