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in Entrepreneurship by (51.3k points)
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Ms. Rosy is a readymade garments manufacturer. Her Annual Usage rate is 225Pcs. The cost of placing each order is Rs.8/- and the carrying cost is Rs.4 per unit. Calculate the Economic Order Quantity (EOQ). How does calculating EOQ facilitate budgeting?

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EOQ = 2 x P x D/C

EOQ = 2 x 225 x 8/4

EOQ = 900

EOQ = 30 Units

EOQ denotes the ideal quantity of raw material and goods to be ordered. This leads to optimum utilization of the financial resources.

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