If the EOQ is 360 units, order cost is Rs. 5 per order and carrying cost is Rs. 0.20 per unit, what is the usage?

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UPSC ESE 2018 Paper 1
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  1. 2654 units
  2. 2592 units
  3. 1875 units
  4. 1574 units

Answer (Detailed Solution Below)

Option 2 : 2592 units
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ST 1: UPSC ESE (IES) Civil - Building Materials
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Detailed Solution

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explanation:

EOQ = 360

(Co) ordering cost per unit = Rs. 5 per order

(Cc) carrying cost per unit = Rs. 0.20

So, 

\(EOQ = \sqrt {\frac{{2R{C_o}}}{{{C_c}}}} \)

\(EOQ = 360 = \sqrt {\frac{{2 \times R \times 5}}{{0.20}}} \;\)

\({\left( {360} \right)^2} = \frac{{2 \times R \times 5}}{{0.20}}\)

\(R = \frac{{{{\left( {360} \right)}^2} \times 0.20}}{{2 \times 5}}\)

R = 2592 Unit

[Demand = 2592 Unit]

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