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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) is
- a)50
- b)100
- c)200
- d)400
Correct answer is option 'D'. Can you explain this answer?
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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and...
Economic order Quantity (EOQ) 
Where D = annual demand = 4000
Co = ordering Cost = 200
Ch = Holding cost = 10% of C
Where D = annual demand = 4000
Co = ordering Cost = 200
Ch = Holding cost = 10% of C
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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and...
Economic order Quantity (EOQ)
Where D = annual demand = 4000
Co = ordering Cost = 200
Ch = Holding cost = 10% of C
Where D = annual demand = 4000
Co = ordering Cost = 200
Ch = Holding cost = 10% of C
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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and...
The economic order quantity (EOQ) is a formula used in inventory management to determine the optimal order quantity that minimizes the total cost of ordering and carrying inventory. In this case, we are given the item cost, ordering cost, inventory carrying cost, and annual demand.
To calculate the EOQ, we can use the following formula:
EOQ = √((2 * annual demand * ordering cost) / inventory carrying cost)
Let's break down the given information and calculate the EOQ step by step:
1. Item cost: The item can be purchased for Rs. 100.
2. Ordering cost: The ordering cost is Rs. 200. This cost includes expenses such as paperwork, transportation, and processing associated with placing an order.
3. Inventory carrying cost: The inventory carrying cost is 10% of the item cost per annum. Since the item cost is Rs. 100, the carrying cost would be 10% of Rs. 100, which is Rs. 10 per unit per year.
4. Annual demand: The annual demand is 4000 units.
Now, let's plug these values into the EOQ formula:
EOQ = √((2 * 4000 * 200) / 10) = √(1600000 / 10) = √160000 = 400
Therefore, the economic order quantity (EOQ) for this item is 400 units. This means that the optimal order quantity to minimize the total cost of ordering and carrying inventory is 400 units.
Option D, 400, is the correct answer.
To calculate the EOQ, we can use the following formula:
EOQ = √((2 * annual demand * ordering cost) / inventory carrying cost)
Let's break down the given information and calculate the EOQ step by step:
1. Item cost: The item can be purchased for Rs. 100.
2. Ordering cost: The ordering cost is Rs. 200. This cost includes expenses such as paperwork, transportation, and processing associated with placing an order.
3. Inventory carrying cost: The inventory carrying cost is 10% of the item cost per annum. Since the item cost is Rs. 100, the carrying cost would be 10% of Rs. 100, which is Rs. 10 per unit per year.
4. Annual demand: The annual demand is 4000 units.
Now, let's plug these values into the EOQ formula:
EOQ = √((2 * 4000 * 200) / 10) = √(1600000 / 10) = √160000 = 400
Therefore, the economic order quantity (EOQ) for this item is 400 units. This means that the optimal order quantity to minimize the total cost of ordering and carrying inventory is 400 units.
Option D, 400, is the correct answer.
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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer?
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An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer? for Defence 2024 is part of Defence preparation. The Question and answers have been prepared according to the Defence exam syllabus. Information about An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Defence 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer?.
An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer? for Defence 2024 is part of Defence preparation. The Question and answers have been prepared according to the Defence exam syllabus. Information about An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Defence 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An item can be purchased for Rs. 100. The ordering cost is Rs. 200 and the inventory carrying cost is 10% of the item cost per annum. If the annual demand is 4000 units, then economic order quantity (in units) isa)50b)100c)200d)400Correct answer is option 'D'. Can you explain this answer?.
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