Purchase Manager has been given an estimated annual purchase requirement of2000 units of material. Unit price of material is Rs20. Annual cost of carrying inventory is 25% of cost of material. Ordering cost for an order is Rs50. What order size would you recommend to the Purchase Manager?

A producer has estimated annual requirements of a material as 7200 units. Cost of placing an order is estimated as Rs 50/order and annual storage cost/unit of material is Rs. 5. Calculate the optimum order quantity or EOQ. Also show that at EOQ level, total ordering cost is equal to total storage cost.

Answer rating: 100% (QA)

EO Q square root of 2 x D x S C x i D annual demand S ordering cost per order C unit co... View the full answer