Annual demand is 8,000 units, ordering cost is ₹50 per order, and carrying cost is ₹4 per unit per year. EOQ equals:
A400 units
B447 units
C632 units
D500 units
Answer & Solution
Correct answer: B. 447 units
1. EOQ formula: sqrt(2 × A × O / C), where A is annual demand, O is ordering cost per order, C is carrying cost per unit per year.
2. Substituting: sqrt(2 × 8,000 × 50 / 4).
3. Inside the root: 8,00,000 / 4 = 2,00,000.
4. sqrt(2,00,000) ≈ 447.2, so EOQ ≈ 447 units.
_Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.5 Illus 4_
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