Can anybody please explain why do we consider the interest element in calculating the Economic Order Quantity ?
Thank you and regards.
2 Replies
Suman Kumar Verma
(Practicing CMA)
(1300 Points)
Replied 03 September 2011
| Originally posted by : Sumanta Das Gupta | ||
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Can anybody please explain why do we consider the interest element in calculating the Economic Order Quantity ? Thank you and regards. |
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We consider interest element because when we are purchaing any qualitity of goods for long time stogare , our capital will also blocked in the same . The cost of interest must be taken into account
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