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Question
The quantity of jeans sold by a shop is 1,200 per month @ ₹ 1,100/-. The cost of placing an order and receiving goods is ₹ 1,500/- per order. The inventory holding cost is ₹ 30/- per annum. What is the economic order quantity for the shopkeeper?
Solution
EOQ = Q
∴ Q = `sqrt((2"PD")/"C")`
P = ₹ 1,500; D = 1,200 × 12 = ₹ 14,400; C = ₹ 30
Q = `sqrt((2 xx 1,500 xx 14,400)/30)`
Q = `sqrt(14,40,000)`
Q = 1,200 jeans
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