in EOQ formala i.e. sqaure root of {( 2 x Annual requirement x Ordering cost ) / Carrying cost}
what is A - whether it is annual requirements or normal usage or demand or consumed quantity
if normal usage qty and demand qty are given den which one to b taken in d formula? pls clarify
whether it is consuption or requirement or demand.....
If i am right you are asking about demand quantity of Product (not input). But for EOQ, we take normal usage as Annual demand. For more clearance you can see ICAI Study Mat. Illustration (Page. 2.31 and Page 2.37) hope you can better understand from Illustrations.
annual requirement of the product ... not counsumption because this relates to what quantity we should purchase and purchase can include good to be retain in stock...
i hope this solves ur query..
Rgds,
G9!
A means annual consumption in Units
annual requirement of the raw MATERIAL
Pooja Here..
Whatever raw materials demanded are meant for consumption purpose to be transformed into "Finished goods"..
Hence, in a nutshell, "Normal usage" can be deemed to be the "Annual Requirements/Annual Dd..
CAclubindia
