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A local tyre distributor expects to sell approximately 9600 steel belted radial tyres next year. Annual carrying cost is Rs. 16 per tyre and ordering cost is Rs. 75. The economic order quantity of the tyres is
[2018]
- a)64
- b)212
- c)300
- d)1200
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
A local tyre distributor expects to sell approximately 9600 steel belt...
D = 9600
CO = 75
Ch = 16 Rs/type
CO = 75
Ch = 16 Rs/type
Most Upvoted Answer
A local tyre distributor expects to sell approximately 9600 steel belt...
Given:
- Number of tyres to be sold next year = 9600
- Carrying cost per tyre = Rs. 16
- Ordering cost = Rs. 75
To Find:
Economic order quantity of the tyres
Explanation:
The economic order quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes the total cost of inventory. It takes into account the carrying cost per unit and the ordering cost.
The formula for EOQ is given by:
EOQ = √[(2 * D * S) / H]
Where:
D = Demand or number of units sold per year
S = Ordering cost per order
H = Carrying cost per unit per year
Calculations:
Given:
D = 9600 (number of tyres sold per year)
S = Rs. 75 (ordering cost)
H = Rs. 16 (carrying cost per tyre)
Substituting the values in the formula, we get:
EOQ = √[(2 * 9600 * 75) / 16]
Simplifying further:
EOQ = √[1440000 / 16]
EOQ = √90000
EOQ = 300
Therefore, the economic order quantity (EOQ) of the tyres is 300.
Conclusion:
The economic order quantity (EOQ) of the steel belted radial tyres is 300. This means that the distributor should order 300 tyres at a time in order to minimize the total cost of inventory.
- Number of tyres to be sold next year = 9600
- Carrying cost per tyre = Rs. 16
- Ordering cost = Rs. 75
To Find:
Economic order quantity of the tyres
Explanation:
The economic order quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes the total cost of inventory. It takes into account the carrying cost per unit and the ordering cost.
The formula for EOQ is given by:
EOQ = √[(2 * D * S) / H]
Where:
D = Demand or number of units sold per year
S = Ordering cost per order
H = Carrying cost per unit per year
Calculations:
Given:
D = 9600 (number of tyres sold per year)
S = Rs. 75 (ordering cost)
H = Rs. 16 (carrying cost per tyre)
Substituting the values in the formula, we get:
EOQ = √[(2 * 9600 * 75) / 16]
Simplifying further:
EOQ = √[1440000 / 16]
EOQ = √90000
EOQ = 300
Therefore, the economic order quantity (EOQ) of the tyres is 300.
Conclusion:
The economic order quantity (EOQ) of the steel belted radial tyres is 300. This means that the distributor should order 300 tyres at a time in order to minimize the total cost of inventory.
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A local tyre distributor expects to sell approximately 9600 steel belted radial tyres next year. Annual carrying cost is Rs. 16 per tyre and ordering cost is Rs. 75. The economic order quantity of the tyres is[2018]a)64b)212c)300d)1200Correct answer is option 'C'. Can you explain this answer?
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A local tyre distributor expects to sell approximately 9600 steel belted radial tyres next year. Annual carrying cost is Rs. 16 per tyre and ordering cost is Rs. 75. The economic order quantity of the tyres is[2018]a)64b)212c)300d)1200Correct answer is option 'C'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about A local tyre distributor expects to sell approximately 9600 steel belted radial tyres next year. Annual carrying cost is Rs. 16 per tyre and ordering cost is Rs. 75. The economic order quantity of the tyres is[2018]a)64b)212c)300d)1200Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A local tyre distributor expects to sell approximately 9600 steel belted radial tyres next year. Annual carrying cost is Rs. 16 per tyre and ordering cost is Rs. 75. The economic order quantity of the tyres is[2018]a)64b)212c)300d)1200Correct answer is option 'C'. Can you explain this answer?.
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