Question

The quantity of jeans sold by a shop is 1,200 per month @ of ₹1100/-. The cost of placing an order and receiving goods is ₹1500/- per order. The inventory holding cost is ₹30/- per annum. What is the economic order quantity for the shopkeeper?

Answer 1

EOQ = Q

Q = \(\sqrt{2PD/C}\)

P = Rs.1500

D = 1200 × 12 = 14,400

C = Rs. 30

Q = \(\sqrt{2 \times1500\times14400/30}\)

= \(\sqrt{1440000}\)

= 1200 jeans