Answer:
The value of Q* is 1597.02.
Step-by-step explanation:
Given information:
Annual demand = 494,000 units
Inventory carrying costs = 25.8% = 0.258
Unit cost = $127.22
Ordering cost = $84.73
The formula for order quantity is
[tex]Q*=\sqrt{\dfrac{2DS}{H}}[/tex]
where, D is annual demand, S is setup ordering cost and H is holding or carrying cost.
[tex]Q*=\sqrt{\dfrac{2\times 494000\times 84.73}{0.258\times 127.22}}[/tex]
[tex]Q*=1597.0169549[/tex]
[tex]Q*\approx 1597.02[/tex]
Therefore, the value of Q* is 1597.02.