Question

A company estimates the demand of 2000 bulbs for the next year. The ordering cost is Rupees 300 per order and the annual carrying cost per bulb is Rupees 30. The economic order quantity (number of bulbs) is .......... (Answer in integer)

Hint:

EOQ is a crucial concept in inventory management that helps determine the most cost-effective order quantity. It minimizes the total cost of ordering and carrying inventory.

Answer 1

Correct Answer: 199

To find the Economic Order Quantity (EOQ), we use the EOQ formula: $QEOQ=\sqrt{\frac{2\times D\times S}{H}}$, where $D$ is the demand (2000 bulbs), $S$ is the ordering cost (Rupees 300), and $H$ is the carrying cost per bulb (Rupees 30).
Substitute the values into the EOQ formula:
$QEOQ=\sqrt{\frac{2\times 2000\times 300}{30}}$
$=\sqrt{\frac{1200000}{30}}$
$=\sqrt{40000}=200$
The calculated EOQ is 200 bulbs. This value is within the expected range of 199 to 199. Therefore, the integer solution to the problem is 200.