The following information are given: Annual requirement: 36,000 units Ordering cost per order: Rs. 60 Cost per unit: Rs. 100 Carrying cost per unit 10% of inventory cost Required: Economic Order…

The Economic Order Quantity (EOQ) is calculated using the formula:

$$EOQ=\sqrt{\frac{2DS}{H}}$$

Where:

• $D=$ Annual requirement = 36,000 units
• $S=$ Ordering cost per order = Rs. 60
• $H=$ Carrying cost per unit = 10% of Rs. 100 = Rs. 10

Substituting the values:

$$EOQ=\sqrt{\frac{2\times 36,000\times 60}{10}}$$

$$EOQ=\sqrt{\frac{4,320,000}{10}}=\sqrt{432,000}=657.25$$

Since inventory cannot be ordered in fractions, the EOQ is 657 units.