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The annual demand for an item is 12000 units and the ordering cost is Rs. 25/order. If the holding cost is 12% of the unit cost, then the number of orders per annum is __________ (Assume unit cost as Rs. 20)
- a)24
- b)24
Correct answer is between ' 24, 24'. Can you explain this answer?
Most Upvoted Answer
The annual demand for an item is 12000 units and the ordering cost is...
D = 12,000 units/year
Co = Rs. 25/order
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The annual demand for an item is 12000 units and the ordering cost is...
To find the number of orders per annum, we can use the economic order quantity (EOQ) formula. The EOQ formula calculates the optimal order quantity that minimizes the total cost of inventory management. The formula is given by:
EOQ = √((2 * D * S) / H)
Where:
D = annual demand
S = ordering cost per order
H = holding cost as a percentage of unit cost
Given values:
Annual demand (D) = 12000 units
Ordering cost per order (S) = Rs. 25/order
Holding cost (H) = 12% of unit cost = 12% * Rs. 20 = Rs. 2.40
Substituting these values into the EOQ formula, we get:
EOQ = √((2 * 12000 * 25) / 2.40)
Simplifying further:
EOQ = √(600000 / 2.40)
EOQ = √250000
Calculating the square root:
EOQ ≈ 500
Therefore, the optimal order quantity (EOQ) is approximately 500 units.
To find the number of orders per annum, we divide the annual demand by the EOQ:
Number of orders per annum = Annual demand / EOQ
Number of orders per annum = 12000 / 500
Number of orders per annum = 24
Therefore, the number of orders per annum is 24.
EOQ = √((2 * D * S) / H)
Where:
D = annual demand
S = ordering cost per order
H = holding cost as a percentage of unit cost
Given values:
Annual demand (D) = 12000 units
Ordering cost per order (S) = Rs. 25/order
Holding cost (H) = 12% of unit cost = 12% * Rs. 20 = Rs. 2.40
Substituting these values into the EOQ formula, we get:
EOQ = √((2 * 12000 * 25) / 2.40)
Simplifying further:
EOQ = √(600000 / 2.40)
EOQ = √250000
Calculating the square root:
EOQ ≈ 500
Therefore, the optimal order quantity (EOQ) is approximately 500 units.
To find the number of orders per annum, we divide the annual demand by the EOQ:
Number of orders per annum = Annual demand / EOQ
Number of orders per annum = 12000 / 500
Number of orders per annum = 24
Therefore, the number of orders per annum is 24.
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The annual demand for an item is 12000 units and the ordering cost is Rs. 25/order. If the holding cost is 12% of the unit cost, then the number of orders per annum is __________ (Assume unit cost as Rs. 20)a) 24b) 24Correct answer is between ' 24, 24'. Can you explain this answer? for Mechanical Engineering 2025 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about The annual demand for an item is 12000 units and the ordering cost is Rs. 25/order. If the holding cost is 12% of the unit cost, then the number of orders per annum is __________ (Assume unit cost as Rs. 20)a) 24b) 24Correct answer is between ' 24, 24'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The annual demand for an item is 12000 units and the ordering cost is Rs. 25/order. If the holding cost is 12% of the unit cost, then the number of orders per annum is __________ (Assume unit cost as Rs. 20)a) 24b) 24Correct answer is between ' 24, 24'. Can you explain this answer?.
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