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The mechanical engineer at Robinson Manufacturing has developed a new gearbox. The local distributor expects to increase his sales by 30% over the past year

The mechanical engineer at Robinson Manufacturing has developed a new gearbox. The local distributor expects to increase his sales by 30% over the past year due to this new development. Last year's sales were $70,000 at a selling price of $100 per unit. The manager would like to cut costs as much as possible and comes to you for advice. Relevant cost information includes:

Warehouse space $3.00/unit
Material handling expense $2.00/unit
Insurance premium $1.00/unit
Total ordering cost $150.00/per order

What is the economic order quantity?

a.

187 units

b.

213 units

c.

522 units

d.

174 units

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