BASIC EOQ Model:The objective of this model is to MINIMIZE total annual cost by means of controlling inventory levels.It is a best-ordered quantity where the total annual cost is minimum.In Basic EOQ model,Annual carrying(Holding) cost = Annual ordering cost∴ to minimize total cost, EOQ(Q) is given by,\(Q = \sqrt {\FRAC{{2D{C_0}}}{{{C_c}}}} \), where D= Annual demand, C0= Ordering cost per order, Cc= Carrying cost per unit per year, CU= per unit material cost.Calculation:Given:D = 500 × 12 = 6000 units per year, Cu= Rs. 25 per unit, Cc= 16% of Cc= 0.16 × 25= Rs. 4 per unit per year,C0= Rs. 50 per order, Q = ?Now, we know that\(Q = \sqrt {\frac{{2D{C_0}}}{{{C_c}}}} \)∴ \(Q = \sqrt {\frac{{2 \times 6000 \times 50}}{4}} = 388\;units\)Therefore the Re-order quantity is 388 units.

"> BASIC EOQ Model:The objective of this model is to MINIMIZE total annual cost by means of controlling inventory levels.It is a best-ordered quantity where the total annual cost is minimum.In Basic EOQ model,Annual carrying(Holding) cost = Annual ordering cost∴ to minimize total cost, EOQ(Q) is given by,\(Q = \sqrt {\FRAC{{2D{C_0}}}{{{C_c}}}} \), where D= Annual demand, C0= Ordering cost per order, Cc= Carrying cost per unit per year, CU= per unit material cost.Calculation:Given:D = 500 × 12 = 6000 units per year, Cu= Rs. 25 per unit, Cc= 16% of Cc= 0.16 × 25= Rs. 4 per unit per year,C0= Rs. 50 per order, Q = ?Now, we know that\(Q = \sqrt {\frac{{2D{C_0}}}{{{C_c}}}} \)∴ \(Q = \sqrt {\frac{{2 \times 6000 \times 50}}{4}} = 388\;units\)Therefore the Re-order quantity is 388 units.

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The monthly consumption of an item is 500 units. The price per unit is Rs. 25. The inventory carrying cost is 16% of item cost and ordering cost is Rs. 50 per order. For an economic order quantity model, determine the Re-order quantity

Current Affairs General Awareness in Current Affairs 8 months ago

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Concept:BASIC EOQ Model:The objective of this model is to MINIMIZE total annual cost by means of controlling inventory levels.It is a best-ordered quantity where the total annual cost is minimum.In Basic EOQ model,Annual carrying(Holding) cost = Annual ordering cost∴ to minimize total cost, EOQ(Q) is given by,\(Q = \sqrt {\FRAC{{2D{C_0}}}{{{C_c}}}} \), where D= Annual demand, C0= Ordering cost per order, Cc= Carrying cost per unit per year, CU= per unit material cost.Calculation:Given:D = 500 × 12 = 6000 units per year, Cu= Rs. 25 per unit, Cc= 16% of Cc= 0.16 × 25= Rs. 4 per unit per year,C0= Rs. 50 per order, Q = ?Now, we know that\(Q = \sqrt {\frac{{2D{C_0}}}{{{C_c}}}} \)∴ \(Q = \sqrt {\frac{{2 \times 6000 \times 50}}{4}} = 388\;units\)Therefore the Re-order quantity is 388 units.

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Posted on 05 Nov 2024, this text provides information on Current Affairs related to General Awareness in Current Affairs. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.

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