Carrying cost ₹6/unit, ordering cost ₹120/order, annual demand 18,000 units. EOQ equals:
A850 units
B600 units
C848 units
D720 units
Answer & Solution
Correct answer: C. 848 units
1. EOQ = sqrt(2 × A × O / C) = sqrt(2 × 18,000 × 120 / 6).
2. Numerator inside the root: 2 × 18,000 × 120 = 43,20,000.
3. Divide by 6: 43,20,000 / 6 = 7,20,000.
4. sqrt(7,20,000) ≈ 848.5 units, rounded down to 848 units.
_Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.5 Illus 5_
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