Question

A company sells a product in packages of 12 units for rupees 20 per package. after a number of years it has been ascertained that the demand for the product is constant at 2,000 package per month. the cost price per package is rupees 10. the ordering cost is rupees 1.20 per order and carrying cost is 10% per annum. you are required to calculate the following:
(a) economic order quantity.
(b) number of orders to be placed each year.​

Answer 1

Answer:

$answer$

b):- A number of orders to be placed each year.

Answer 2

Given:

•Annual requirement A = 2000 ×12 = 24,000 units

•Carrying cost C = 10% of cost = 10% of 10

= 1 rupees per packet p.a.

• ordering cost S = 1.2 per order

To find:

(a) economic order quantity

$eoq = \sqrt{ \frac{2as}{c} }$

$= \sqrt{ \frac{2 \times 24000 \times 1.2}{1} }$

= 240 packege

(b)number of orders to be placed each year:

$= \frac{a}{eoq}$

$= \frac{24000}{240}$

$= 100 \: orders$

Solution:

(a)economic order quantity = 240 package

(b)number of orders to be placed each year =100 orders