Question

‘Tech Supplies Ltd.' sells bluetooth speakers and needs to maintain a smooth supply to meet customer demand. Annual quantity of bluetooth speakers sold by the company is 2500 units. Cost of placing an order and receiving the bluetooth speakers is Rs. 50 per order. Inventory holding cost per unit is Rs. 25 per annum.

Calculate the Economic Order Quantity (EOQ) for ‘Tech Supplies Ltd.'

Hint:

$$\text{EOQ} = \sqrt{\frac{2 \times \text{Annual Demand} \times \text{Ordering Cost}}{\text{Carrying Cost}}}$$ Double-check your calculations:

• Total annual ordering costs: $\frac{2500}{100} \times 50 = \text{Rs. } 1,250$.
• Total annual carrying costs: $\frac{100}{2} \times 25 = \text{Rs. } 1,250$.

Because both costs are equal at 100 units, the solution is verified.

Answer 1