5. A company buys 8000 units of an item for its annual requirement. Each unit costs Rs. 10, the ordering cost per order is Rs. 30 and the carrying cost is 7.5% of the average inventory per year. The economic order quantity will be

[amp_mcq option1=”566 units” option2=”800 units” option3=”2530 units” option4=”900 units” correct=”option1″]

Detailed SolutionA company buys 8000 units of an item for its annual requirement. Each unit costs Rs. 10, the ordering cost per order is Rs. 30 and the carrying cost is 7.5% of the average inventory per year. The economic order quantity will be