Question

Find out EOQ from the following:-
Annual usage 4000 units,
Cost of material per unit Rs. 2,
Cost of placing and receiving one order Rs. 5,
Annual carrying cost of one unit 8% of inventory cost?​

Answer 1

Answer:

EOQ = √(2 DS / H)

D = Annual demand = 4000

S = Order cost or set up cost = Rs. 2

H = Holding cost = Rs. 5, × inventory cost (8%)

EOQ = √(2 DS / H)

➨ √ 2 × 4,000 × 2 / 5 × 8

➨ √400

➨ 20

EOQ = 20

Answer 2

Answer:

EOQ = 20 Units

Explanation:

Given :

Annual usage = 4000 units (RU)

Cost of material per unit = Rs. 2 (OC)

Cost of placing and receiving one order = Rs 5 (UC)

Annual carrying cost of one unit = 8% ofinventory cost

Find :

Find out EOQ (Economic Order Quantity)

Solution :

EOQ (Economic Order Quantity) :

⇒ $EOQ \: = \: \sqrt{ \frac{2 \: \times \: RU \: \times \: OC}{UC \: \times \: CC \:}}$

⇒ $EOQ \: = \: \sqrt{ \frac{2 \: \times \: 4,000 \: \times \: 2}{5 \: \times \: 8}}$

⇒ $\sqrt{ \frac{16,000}{40}}$

⇒ $\sqrt{400}$

⇒ 20

EOQ = 20 Units