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Annual quantity of jeans sold by a shop is 1,200 at the rate of ₹ 100/- per month. Cost of placing an order and receiving goods is ₹ 500/- per order. Inventory holding cost is ₹ 30/- per annum. What is the economic order quantity for the shopkeeper?
- a)500 jeans
- b)200 jeans
- c)630 jeans
- d)800 jeans
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/-...
The economic order quantity, or EOQ, is a calculation designed to find the optimal order quantity for businesses to minimize logistics costs, warehousing space, stockouts, and overstock costs.
The formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.
The formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.
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Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/-...
Calculation of Economic Order Quantity (EOQ)
To calculate the economic order quantity (EOQ), we need to consider the following factors:
1. Annual demand or quantity of jeans sold by the shop: 1,200 jeans
2. Monthly demand: 1,200 / 12 = 100 jeans
3. Cost of placing an order and receiving goods: 500/-
4. Inventory holding cost: 30/- per annum
Formula for EOQ:
EOQ = √((2 * Annual Demand * Cost per Order) / Holding Cost per Unit)
Calculation:
Plugging in the given values into the formula:
EOQ = √((2 * 1,200 * 500) / 30)
Simplifying the equation:
EOQ = √(40,000)
Calculating the square root:
EOQ ≈ 200
Therefore, the economic order quantity for the shopkeeper is approximately 200 jeans.
Explanation:
The economic order quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes the total cost of ordering and holding inventory. In this case, the shopkeeper wants to determine the optimal quantity of jeans to order to minimize the costs associated with ordering and holding inventory.
The formula takes into account the annual demand of the product, the cost per order, and the holding cost per unit. By calculating the EOQ, the shopkeeper can balance the costs of ordering too frequently (resulting in high order costs) and holding excess inventory (resulting in high holding costs).
In this case, the annual demand is given as 1,200 jeans, which translates to a monthly demand of 100 jeans. The cost of placing an order and receiving goods is 500/- per order, and the inventory holding cost is 30/- per annum.
Plugging these values into the EOQ formula, we calculate that the optimal order quantity for the shopkeeper is approximately 200 jeans. This means that the shopkeeper should place an order for 200 jeans at a time to minimize the total cost of ordering and holding inventory.
Conclusion:
The economic order quantity (EOQ) for the shopkeeper is approximately 200 jeans. By ordering this quantity at a time, the shopkeeper can minimize the costs associated with ordering and holding inventory.
To calculate the economic order quantity (EOQ), we need to consider the following factors:
1. Annual demand or quantity of jeans sold by the shop: 1,200 jeans
2. Monthly demand: 1,200 / 12 = 100 jeans
3. Cost of placing an order and receiving goods: 500/-
4. Inventory holding cost: 30/- per annum
Formula for EOQ:
EOQ = √((2 * Annual Demand * Cost per Order) / Holding Cost per Unit)
Calculation:
Plugging in the given values into the formula:
EOQ = √((2 * 1,200 * 500) / 30)
Simplifying the equation:
EOQ = √(40,000)
Calculating the square root:
EOQ ≈ 200
Therefore, the economic order quantity for the shopkeeper is approximately 200 jeans.
Explanation:
The economic order quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes the total cost of ordering and holding inventory. In this case, the shopkeeper wants to determine the optimal quantity of jeans to order to minimize the costs associated with ordering and holding inventory.
The formula takes into account the annual demand of the product, the cost per order, and the holding cost per unit. By calculating the EOQ, the shopkeeper can balance the costs of ordering too frequently (resulting in high order costs) and holding excess inventory (resulting in high holding costs).
In this case, the annual demand is given as 1,200 jeans, which translates to a monthly demand of 100 jeans. The cost of placing an order and receiving goods is 500/- per order, and the inventory holding cost is 30/- per annum.
Plugging these values into the EOQ formula, we calculate that the optimal order quantity for the shopkeeper is approximately 200 jeans. This means that the shopkeeper should place an order for 200 jeans at a time to minimize the total cost of ordering and holding inventory.
Conclusion:
The economic order quantity (EOQ) for the shopkeeper is approximately 200 jeans. By ordering this quantity at a time, the shopkeeper can minimize the costs associated with ordering and holding inventory.
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Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer?.
Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Annual quantity of jeans sold by a shop is 1,200 at the rate of 100/- per month. Cost of placing an order and receiving goods is 500/- per order. Inventory holding cost is 30/- per annum. What is the economic order quantity for the shopkeeper?a)500jeansb)200jeansc)630jeansd)800jeans Correct answer is option 'B'. Can you explain this answer?.
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