Mechanical Engineering Exam > Mechanical Engineering Questions > Annual demand for a product costing Rs. 100 p...
Start Learning for Free
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is?
Most Upvoted Answer
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Orde...
Calculation of Economic Lot Size
Gathering the Given Data
- Cost per piece (C) = Rs. 100
- Annual demand (D) = Rs. 900
- Ordering cost per order (S) = Rs. 100
- Inventory holding cost (H) = Rs. 2 per unit per year
Calculation of Economic Lot Size
The formula to calculate the economic lot size is:
Economic Lot Size = √(2DS/H)
By substituting the given data in the formula:
Economic Lot Size = √(2 × 100 × 900/2) = √(90000) = 300
Explanation of Economic Lot Size
The economic lot size is the optimal quantity of units that a company should order to minimize the total cost of ordering and holding inventory. In this case, the economic lot size is 300 units. This means that the company should order 300 units of the product at a time to minimize the total cost of ordering and holding inventory.
By ordering 300 units at a time, the company will incur an ordering cost of Rs. 100 per order. Since the annual demand is Rs. 900, the company will place 3 orders in a year. The total ordering cost will be Rs. 300.
The company will also incur a holding cost of Rs. 2 per unit per year. Since the company is ordering 300 units at a time, the average inventory will be 150 units. The total holding cost will be Rs. 300.
Therefore, the total cost of ordering and holding inventory will be Rs. 600 (Rs. 300 for ordering and Rs. 300 for holding). This is the minimum total cost that the company can achieve by ordering 300 units at a time.
Community Answer
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Orde...
300
Attention Mechanical Engineering Students!
To make sure you are not studying endlessly, EduRev has designed Mechanical Engineering study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Mechanical Engineering.
|
Explore Courses for Mechanical Engineering exam
|
|
Similar Mechanical Engineering Doubts
Top Courses for Mechanical EngineeringView all
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is?
Question Description
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? 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 Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is?.
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? 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 Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is?.
Solutions for Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? in English & in Hindi are available as part of our courses for Mechanical Engineering.
Download more important topics, notes, lectures and mock test series for Mechanical Engineering Exam by signing up for free.
Here you can find the meaning of Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? defined & explained in the simplest way possible. Besides giving the explanation of
Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is?, a detailed solution for Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? has been provided alongside types of Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? theory, EduRev gives you an
ample number of questions to practice Annual demand for a product costing Rs. 100 per piece is Rs. 900. Ordering cost per order is Rs. 100 and inventory holding cost is Rs. 2 per unit per year. The economic lot size is? tests, examples and also practice Mechanical Engineering tests.
|
|
Explore Courses for Mechanical Engineering exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup