ABC company annual consumption of raw material 72000 castings and ordering cost per order Rs. 11000 and carrying cost per casting p.a Rs. 500.

Following is the formula for the economic order quantity (EOQ) model:

Where Q = optimal order quantity

D = units of annual demand

S = cost incurred to place a single order or setup

H = carrying cost per unit

So the Economic Order Quantity is = SQRT (2 x72000 x11000 /500 )

SQRT (3168000 ) =1780

Economic Order Quantity is equal to1780 per units. 

Correct  answer given by Mr.  hany haleem and Mr. Mir Mujtaba

E.O.Q=1780 units. It is a useful question and helped to revise my knowledge.

EOQ=1780

Number of orders per year40 order.

Best Regards