EOQ 400 units, annual demand 8,000, ordering cost ₹50, carrying cost ₹5 per unit per year. Total inventory cost at EOQ is:
A₹4,000
B₹1,500
C₹3,000
D₹2,000
Answer & Solution
Correct answer: D. ₹2,000
1. At EOQ, ordering cost equals carrying cost.
2. Carrying cost at EOQ = (EOQ/2) × C = (400/2) × 5 = ₹1,000.
3. Ordering cost at EOQ = (A/EOQ) × O = (8,000/400) × 50 = ₹1,000.
4. Total inventory cost = 1,000 + 1,000 = ₹2,000.
_Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.5.2 ¶3_
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