Question

find out the economic order quantity from the following particulars annual usage rupees 120000 cost of placing and receiving an order rupees 60 annual carrying cost 10% of inventory value

Answer 1

Answer:

EOQ= √2AO/C

here,

A= Annual consumption

O= ordering cost

C= carrying cost

so,

√2*1,20,000*60/0.1

= √14,40,00,000

= ₹12,000 ( ans )

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Answer 2

Answer:

The economic order quantity is 12000.

Explanation:

Given,

Annual usage = Rs 1,20,000

Cost of placing and receiving an order = Rs 60

Annual carrying cost = 10% of inventory value

Formula of economic order quantity = $\sqrt{\frac{2 x A x D}{C} }$

Where  A is the cost of placing one order, D is the annual demand, and C is the annual carrying cost of inventory value .

Therefore, EOQ = $\sqrt{\frac{2 x 120000 x 60}{0.1} }$ = 12000