Question

a company uses 50000 widgets per annum which cost Rs. 10 per piece to purchase. The ordering and handling costs are Rs. 150 per order and carrying costs are 15% per annum. Find the EOQ​

Answer 1

Answer:

demand r=50000

handling cost=15%*10=1.5

ordering cost=150/order

Step-by-step explanation:

Eoq=√2*ordering cost*demand÷handling cost

EOQ=√2×150×50000÷1.5=3162.28 units

Answer 2

EOQ is 2,582 units

Explanation:

The formula to compute the EOQ (Economic Order Quantity) is as:

EOQ = √ 2 × Ordering cost × Demand / Handling Cost

where

Given,

Demand (r) = 50,000

Handling cost = Carrying cost × Cost per piece

= 15% × 10

= 1.5

Ordering cost = Rs 150 per order

Putting the values in the above formula:

EOQ = √ 2 × 150 × 50,000/ 1.5

= √ 15,000,000 / 1.5

= 3,872.9 / 1.5

= 2,581.9 or 2,582 units