Given : R = 2000 ; P = Rs. 30 C3 = Rs. 200
C2 = Re. 1 per item/month.
i.e„ C2 =1><12= 12/year.
C1 = Rs. 8 per item per year.
(Here shortage cost is given, so use EOQ model II)
1. Economic order quantity is –
Q° = 408.25 units
2. Minimum average cost is –