CA Inter P4 · Chapter 2 · Question 2 of 12
Using the data where annual demand is 32,400 units, ordering cost is ₹200 per order and carrying cost is ₹9 per unit per annum, what is the total annual ordering and carrying cost when orders are placed at the EOQ of 1,200 units?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹10,800
Explanation
Number of orders = 32,400 / 1,200 = 27. Ordering cost = 27 x ₹200 = ₹5,400. Average stock = 1,200 / 2 = 600 units, so carrying cost = 600 x ₹9 = ₹5,400. Total = ₹10,800. At EOQ the ordering cost equals the carrying cost, which is a useful check.
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