Sarthaks Test
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A dealer supplies the following information with regard to a product dealt by him. Annual demand = 4500 units. Ordering cost = Rs. 20. Holding cost = Rs. 2.00. Shortage Cost = Rs. 12. Determine EOQ and Total variable cost.

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Given: R = 4500 units ; 

C3 = Rs. 20 

C1=Rs. 2, C2 = Rs 12 

The economic order quantity is – 

Q° = 1052 units (Approx)

i.e., Q°= 324 Units. 

Total variable cost/minimum average cost is

C(Q°, S°) =Rs. 555.49

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