A company uses 15,000 units of stock item 'A' each year. The item has a purchase cost of Rs.4 per unit. The cost of placing an order for re-supply is Rs.220. The annual holding cost of one unit of the item is 10% of its purchase cost. Required (1) What is the economic order quantity for item 'A', to the nearest unit? (ii) What would be the effect of an increase in the annual holding cost per unit on (1) the EOQ and (2) total annual ordering costs?

Answer rating: 100% (QA)

To calculate the economic order quantity EOQ for item A we can use the EOQ formula EOQ 2 Annual Dema... View the full answer