Khushi (CA & CS Final) (1367 Points)
26 July 2009can anyone tell me the solution of this Question...
Q1. the annual demand for an item of stock is 45 units. the item costs rs 200 per unit to purchase. holding costs are 15% of the unit costs per annum and the ordering costs are rs. 300 per order. the supplier offers a 2% discount for orders in excess of 60 units and a discount of 5% for orders in excess of 90 units. what is the economic lot size?
thanks
Niral Gangar
(Management Consulting Investment Advisory CA Practice)
(100 Points)
Replied 26 July 2009
EOQ = root of 2AS/C i.e 2 x annual demand for inputs x cost of placing and order / Annual carrying cost p.u.p.a
therefore EOQ = root of 2 x 45 x 300 / 30
= 30 units
Since annual demand is less than the quantity mentioned for discount in both the cases the discount cannot be taken into account.
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