Can anybody please explain why do we consider the interest element in calculating the Economic Order Quantity ?
Thank you and regards.
Menu
Economic order quantity
Replies (1)
If you had to borrow money to pay for your inventory, the interest rate would be part of the carrying cost. If you did not borrow on the inventory, but have loans on other capital items, you can use the interest rate on those loans since a reduction in inventory would free up money that could be used to pay these loans
Recent Topic
- How to show Capital Gain on gifted property
- TIS Glitch Alert : inflated summary
- IT returns of partners
- Challan status in Payment Failed but amount deduct
- Sec 54 exemption
- Query regarding retirement benefits
- TDS Payment and filing
- Capital gains exemption under sec 54
- Revamped traces portal, conso file download failed
- Due date of ITR for Option Trader
Related Topics
CAclubindia
