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CMA Sameer Epari (Querist)

08 October 2009 Can any one will help me on this ?
How to calculate the Annual consumption by using EOQ, if the following data is available

1.Purchase price of the material-Rs.200
2.Cost of an order-Rs.100
3.Annual cost of carrying one unit of inventory-Rs.20
4.Total cost of carrying inventory and ordering cost per annum-Rs.4000

Manish Soni

Manish Soni (Expert)

08 October 2009 As we are aware that at EOQ total carrying coat is equal to total ordering cost. Therefore
Total carrying cost = Total ordering cost
So Total carrying cost = 4000/2 = 2000
Total ordering cost = 4000/2 = 2000

Total carrying cost = 2000
1/2 * EOQ * carrying cost p.u.p.a = 2000
1/2 * EOQ * 20 = 2000
Therefore EOQ = 2000*2/20
= 200 units

Total ordering cost = 2000
EOQ * No. of orders = 2000
200 * No. of orders = 2000
Therefore No. of orders = 2000/200
= 10

Therefore annual consumption = 200 * 10
= 2000units

CMA Sameer Epari

CMA Sameer Epari (Querist)

08 October 2009 Thank you, So much sir..
for spending your valuabe time towards my query

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