Question

Q) The annual demand for a product is 6400 units the unit cost is 6/- and inventory carrying cost per unit per annum is 25/- of the average inventory cost. If the cost of procurement is 75/ Determine:
i) EOQ
ii) No of orders per annum
iii) Time between two consecutive orders​

Answer 1

Explanation:

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Answer 2

Given:

c=75

d=6400

i=25/100

p=6

(1) $\text { Economic Order Quantity }=\sqrt{\frac{2 \mathrm{~cd}}{\mathrm{ip}}}$

$\th=\sqrt{\frac{2 \times 75 \times 64,000}{\left(\frac{25}{100}\right) \times 6}}$

$=\sqrt{\frac{9,60,000}{0.25 \times 6}}$

$=\sqrt{\frac{9,60,000}{1.50}}\\=\sqrt{64,000}\\=800 \text { units }$

(2) $\text { - Number of Orders to be placed per annum }=\frac{\text { Annual Demand/Consumption }}{\text { EOQ }}$

$\begin{array}{l}=\frac{6,400}{800} \\=8 \text { orders }\end{array}$

(3) $=\frac{\text { Number of days in a year }}{\text { Number of orders to be placed in a year }}$

$\begin{array}{l}=\frac{360}{8} \\=45 \text { days }\end{array}$

Hence the answer are as follows:

i) EOQ=800units

ii) No of orders per annum=8 orders

iii)Time between two consecutive orders​=45 days