Question

If annual demand is 24,000
units, Set up cost per batch
is Rs 120 and Carrying Cost
per unit p.a.is Rs 0.36. Find
EBQ.​

Answer 1

Annual Demand for the component 24000

Set-up cost per batch Rs. 120

Carrying Cost per Unit of Production Rs. 0.36

= Square root of ( 2 X 24000 X 120) / 0.36 ) = 4000 units

Answer 2

Given:

If the annual demand is 24,000 units, Set up the cost per batch is Rs 120 and the Carrying Cost per unit p.a.is Rs 0.36.

To Find:

Find EBQ

Solution:

Economic batch quantity is the method by which a firm or industry determines how much quantity shall be produced in a given batch for a particular period of time.

Annual demand A=24000 units

Setup cost S= Rs120

Carrying cost C= Rs0.36/unit/annum

So the EBQ can be calculated as,

$EBQ=\sqrt{\frac{2AS}{C} }$

So the value of EBQ will be,

[tex]EBQ=\sqrt{\frac{2*24000*120}{0.36} } \\ =4000 units[/tex]

Hence, the value of EBQ is 4000 units.