An economic enterprise requires 90,000 units of certain item annually. The cost per unit is Rs. 3. The cost per purchase order is Rs. 300 and the inventory carrying cost is Rs. 6 per unit per year. What is EOQ? 

Economic order quantity (EOQ) is the ideal quantity of units a company should purchase to meet demand while minimizing inventory costs such as holding costs, shortage costs, and order costs.

Key Points

• Economic order quantity (EOQ):
  •  The EOQ formula is: EOQ = √(2DK/H)
  • In this formula:
  • D = The number of units purchased of a particular product per year (annual demand)
  • K = Order cost per purchase order
  • H = Annual holding cost per unit
  • Here 
  • D = 90,000 units
  • K = 300 units
  • H = 6 Units
  • Therefore  EOQ = √(2*90000*300/6)
• EOQ=3000 units 

Hence we can say that the correct answer is  3000 units