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. A manufacturing company uses 12,000 units of materials per year.
The cost of placing an order is 12 per order. Cost of material per unit
is 1. Inventory carrying cost is 24 %. Find EOQ.?
The cost of placing an order is 12 per order. Cost of material per unit
is 1. Inventory carrying cost is 24 %. Find EOQ.?
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. A manufacturing company uses 12,000 units of materials per year. The...
Calculating Economic Order Quantity (EOQ)
To calculate the Economic Order Quantity (EOQ), we need to consider the following factors:
Demand Rate (D): The demand rate is the number of units used per year. In this case, the company uses 12,000 units of materials per year.
Ordering Cost (S): The ordering cost is the cost incurred each time an order is placed. Here, the cost of placing an order is $12 per order.
Carrying Cost (H): The carrying cost is the cost of holding one unit of inventory for a year. It is given that the inventory carrying cost is 24%.
The formula to calculate the EOQ is:
EOQ = √((2DS) / H)
Calculating EOQ:
- D = 12,000 units
- S = $12 per order
- H = 24% = 0.24
Plugging these values into the formula:
EOQ = √((2 * 12,000 * 12) / 0.24)
EOQ = √((288,000) / 0.24)
EOQ = √(1,200,000)
EOQ ≈ 1,095 units
Therefore, the Economic Order Quantity (EOQ) for the manufacturing company is approximately 1,095 units. This means that the optimal order quantity that minimizes the total inventory costs for the company is 1,095 units per order. By ordering this quantity, the company can strike a balance between ordering costs and carrying costs, leading to efficient inventory management.
To calculate the Economic Order Quantity (EOQ), we need to consider the following factors:
Demand Rate (D): The demand rate is the number of units used per year. In this case, the company uses 12,000 units of materials per year.
Ordering Cost (S): The ordering cost is the cost incurred each time an order is placed. Here, the cost of placing an order is $12 per order.
Carrying Cost (H): The carrying cost is the cost of holding one unit of inventory for a year. It is given that the inventory carrying cost is 24%.
The formula to calculate the EOQ is:
EOQ = √((2DS) / H)
Calculating EOQ:
- D = 12,000 units
- S = $12 per order
- H = 24% = 0.24
Plugging these values into the formula:
EOQ = √((2 * 12,000 * 12) / 0.24)
EOQ = √((288,000) / 0.24)
EOQ = √(1,200,000)
EOQ ≈ 1,095 units
Therefore, the Economic Order Quantity (EOQ) for the manufacturing company is approximately 1,095 units. This means that the optimal order quantity that minimizes the total inventory costs for the company is 1,095 units per order. By ordering this quantity, the company can strike a balance between ordering costs and carrying costs, leading to efficient inventory management.
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. A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.?
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. A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about . A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for . A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.?.
. A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about . A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for . A manufacturing company uses 12,000 units of materials per year. The cost of placing an order is 12 per order. Cost of material per unit is 1. Inventory carrying cost is 24 %. Find EOQ.?.
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