Your company is managing inventory for a large commercial project. The Economic Order Quantity (EOQ) for concrete blocks is 2,400 units. If annual demand is 28,800 units, how many orders should be placed per year?
Correct Answer
B) 12 orders
Number of orders = Annual demand ÷ EOQ = 28,800 ÷ 2,400 = 12 orders per year. This calculation helps determine ordering frequency for optimal inventory management.
Why This Is the Correct Answer
The correct answer is B (12 orders) because the number of orders per year is calculated by dividing the annual demand by the Economic Order Quantity (EOQ). With an annual demand of 28,800 units and an EOQ of 2,400 units, the calculation is 28,800 ÷ 2,400 = 12 orders. This formula ensures optimal inventory management by determining how frequently orders should be placed to minimize total inventory costs while meeting project demands.
Why the Other Options Are Wrong
Option A: 8 orders
Option A (8 orders) would result from incorrectly calculating 28,800 ÷ 3,600, suggesting an EOQ of 3,600 units rather than the given 2,400 units.
Option C: 20 orders
Option D (20 orders) would result from incorrectly calculating 28,800 ÷ 1,440, suggesting an EOQ of 1,440 units rather than the given 2,400 units.
Option D: 15 orders
Option C (15 orders) would result from incorrectly calculating 28,800 ÷ 1,920, suggesting an EOQ of 1,920 units rather than the given 2,400 units.
Memory Technique
Remember 'NADE' - Number of orders = Annual demand Divided by EOQ. Think 'Need A Delivery Every' time you reach the EOQ amount.
Reference Hint
Look up inventory management and Economic Order Quantity (EOQ) concepts in construction management or business administration chapters of contractor reference materials.
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