Economic Order Quantity(EOQ)

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A D - Loving Life (Querist)
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18 November 2008 If consumption of material per annum : 10000kg
order placing cost per order: Rs. 50
cost per kg of raw materials :Rs. 2
Storage cost: 8 percent average inventory
Calculate the EOQ. Also no. of orders to b placed. Also Carrying Cost?

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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18 November 2008 EOQ= Sqrt 2*50*10000/.16
= 2500

No. of Orders:Demand/EOQ
= 10000/2500
= 4
Ordering cost: 50*4 = 200
Carrying cost: C*EOQ/2
= .16*2500/2 = 200

**Ordering and carrying cost should be equal at EOQ Level, in this que. its 200.

**DM

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