Question

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

Answer 1

Answer:

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Explanation:

Answer 2

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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