A firm has been ordering a certain item $6000$ units at a time.

The firm estimates that ordering cost is $$200/$order$,$ and that annual demand is $18000$ units per year. The assumptions of the basic EOQ model are thought to apply.

For what value of holding cost $($H: avg $cost of holding one piece for $1$ year$)$ would their ordering policy $(600$ units per order$)$ be economically optimal $($be the EOQ$)?$

EOQ $=$ Sq Root$[(2$D$*$S$)/$H$]$

Where: D $=$ annual demand in units

S $=$ cost of placing $1$ order

H $=$ cost of holding $1$ unit of that item in inventory for $1$ year