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Agree with answers logged so far.
EOQ = SQRT(2 X Annual usage X Order cost / Holding cost
SQRT (2 X5000 X50 / (10% X20))
EOQ =500
According to given data:
Annual Usage =5000 units
ordering cost =50
Carrying Cost = Carrying cost % x Per Unit
carrying cost =10% x20
Carrying Cost =0.1 x20 =2
So,
E.O.Q = √2 x annual requirement x ordering cost / carrying cost
E.O.Q = √2 x5000 x50 /2
E.O.Q =500 Units
Economic Order Quantity is500 Units
=SQ ROOT of [2*5000*50/(20*0.10)]=500 units
The formula for EOQ is as follows.
Formula = Q = \\\\/2 FU / PC
\\\\/ Means Square root.
So Q= \\\\/ ((2X50X5000) / (20 x.10))
Q=500
Correct answer by All the peoples
agree with mr Ani Kuriakose Managing Partner
I agree with all the answers
where : S = Setup costs D = Demand rate P = Production cost I = Interest rate (considered an opportunity cost, so the risk-free rate can be used)
Good answer by Mr Mir, thanks