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.
Last updated
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
80 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
Related questions
A bond with a face value of Rs. 1,000 pays annual interest of Rs. 80 and currently sells for Rs. 800. What is its approximate current yield?
A business has annual fixed costs of Rs. 300,000, a selling price of Rs. 50 per unit and variable cost of Rs. 30 per unit. What is its break-even output?
A business has sales of Rs. 1,000,000 and variable costs of Rs. 600,000. What is its contribution margin ratio?
A business has total assets of Rs. 2,400,000 and total liabilities of Rs. 1,500,000. What is the value of its owners' equity?
A company deposits Rs. 100,000 at the end of each year for three years in an account earning 10% annually. What is the approximate value of these deposits at the end of the third year?