Question

17. XYZ company produces 500 boxes every month. Raw material is purchased at the rate of 10
unit of finished product. Its ordering cost is 400 each order and other costs are as follows:
(i) Interest 2% p.a.
(ii) Godown Rent 150 p.m.
() Insurance Premium 3.6% on a policy of 1,00,000
(iv) Wastage, Theft, etc. 1% p.a.
Calculate :
(a) Inventory Carrying cost per unit
(b) Economic Order Quantity
(c) Total Inventory Cost
​

Answer 1

Answer:

Raw material is purchased at the rate of 10unit of finished ... Its ordering cost is 400 each order and other costs are as ... (i) Interest 2% p.a. (ii) Godown Rent 150 p.m.

Answer 2

Answer:

Carrying cost =1.20

EOQ=2000

Material cost=62400

Explanation:

Annual interest=6000x10=60000x20/100=1200

rent=150x12=1800

insurance=100000x3.6/100=3600

wastage=60000x1/100=600

Carrying cost =7200/6000=1.20

EOQ=$\sqrt$2C0/I=$\sqrt{2X6000X400/1.2}$=2000

Material cost=500x12=6000x10=60000

total ordering cost=6000/2000=3x400=1200

total carrying cost=2000/2=1000x1.2=1200

total cost=60000+1200+1200=62400