A firm expects annual demand of 10,000 units, ordering cost of Rs. 500 per order and annual holding cost of Rs. 20 per unit. What is the approximate economic order quantity?
Correct answer: C. 707 units
- A. 500 units
- B. 600 units
- C. 707 units
- D. 1,000 units
Explanation
EOQ is calculated as the square root of 2DS divided by H. Here, the result is approximately 707 units, which balances ordering and holding costs.
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