Question
Download Solution PDFGiven an annual usage value of 400 units, the procurement cost is ₹20 per order, cost per piece is ₹100 and cost of carrying inventory is 10%. Calculate the EOQ.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFConcept:
EOQ (Economic Order Quantity) is calculated using the formula:
\( EOQ = \sqrt{\frac{2AD}{H}} \)
Where:
- A = Annual demand = 400 units
- D = Ordering cost = ₹20
- H = Holding cost per unit per year = 10% of ₹100 = ₹10
Calculation:
\( EOQ = \sqrt{\frac{2 \times 400 \times 20}{10}} = \sqrt{\frac{16000}{10}} = \sqrt{1600} = 40 \)
Last updated on Jun 7, 2025
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