Question
A television manufacturer requires 20000 pieces of wire (each 2 cm long) every month for assembly. Ordering cost per order is Rs. 4000 and carrying (or holding) cost is 25 percent of the unit price. The price per unit of a piece is Rs. 25. Assuming delivery is instantaneous; find the economic order quantity (EOQ) and the reorder point.
Answer :
Word Count : 180
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To calculate the Economic Order Quantity (EOQ), we use the formula: [ EOQ = \sqrt{\frac{2DS}{H}} ] Where: (D =) Demand per year = 20,000 pieces × 12 months = 240,000 pieces (S =) Ordering cost per order = Rs. 4000 (H =) Holding cost per unit per year = 25% of unit price = 0.25 × 25 = Rs. 6.25 Substituting the values: [ EOQ
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