A precision Engineering Factory consumes 50,000 units of a component per year. The ordering, receiving and handling costs are Rs.3 per order while the tracking costs are Rs.12 per order. Further details are as follows: Interest cost Rs.0.06 per unit per year. Storage cost Rs.1000 per year for 50,000 units. Deterioration and obsolescence cost Rs.0.004 per unit per year. Calculate the Economic Order Quantity
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Answer:
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Explanation:
Explanation:
Given A precision Engineering Factory consumes 50,000 units of a component per year. The ordering, receiving and handling costs are Rs.3 per order while the tracking costs are Rs.12 per order. Further details are as follows: Interest cost Rs.0.06 per unit per year. Storage cost Rs.1000 per year for 50,000 units. Deterioration and obsolescence cost Rs.0.004 per unit per year. Calculate the Economic Order Quantity
- So the details are given as follows. We need to find the Economic Order Quantity
- Carrying cost per unit per year Rs 0.060
- Deterioration and obsolescence cost per unit per year Rs 0.004
- Storage cost for Rs 1000
- per year for 50,000 units (1000 / 50,000) per year Rs 0.020
- So Total will be Rs 0.084
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