About 2025 units are
required monthly for a
machine. A fixed cost of
Rs. 40 per order is
incurred for placing an
order. The carrying cost
of material per unit
amounts to Rs. 2.4 per
annum.compute EOQ.
2025 Units
D
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EOQ for this situation is 63.64
Explanation:
- If we denote
- D: Annual Quantity Demanded
- Q: Volume per Order
- S: Ordering Cost (Fixed Cost)
- C: Unit Cost (Variable Cost)
- H: Holding Cost (Variable Cost)
- i: Carrying Cost (Interest Rate)
- We have been Given H = 2.4, S = 40, D = 2025
- We have the Formula
- Therefore = 63.639610306
IMPORTANT DEFINITIONS:
"The abbreviation (EOQ) stands for "economic order quantity." It's a measure used in supply chain management, operations, and logistics."
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