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    Question

    Determine the Economic Batch Quantity (EBQ) for the following data:

    Annual requirement of parts: 36,000 units

    Inventory holding cost: 20% of the part value per year

    Setup cost: ₹450 per setup

    Cost per part: ₹150

    A 329 Correct Answer Incorrect Answer
    B 346 Correct Answer Incorrect Answer
    C 465 Correct Answer Incorrect Answer
    D 600 Correct Answer Incorrect Answer
    E 1039 Correct Answer Incorrect Answer

    Solution

    The ordering quantity Q* at which holding cost becomes equal to ordering cost and the total inventory cost is minimum is known as Economic order Quantity (EOQ). D = 36000 units, Order Cost per order = Rs. 450, carrying cost per annum per unit= 20% of value/year = Rs. 30

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