Mr. Ram has to buy 4000 units. His annual consumption is 4000 units, order cost is Rs. 80 and maintenance cost in a year is Rs. 4. Economic order quantity will be

The economic order quantity (EOQ) is the order quantity that minimizes the total inventory costs. It is calculated as follows:

$EOQ = \sqrt{\frac{2DC}{h}}$

where:

• $D$ is the annual demand,
• $C$ is the order cost,
• $h$ is the holding cost per unit per year.

In this case, we have:

• $D = 4000$ units
• $C = 80$ rupees
• $h = 4$ rupees per unit per year.

Substituting these values into the formula, we get:

$EOQ = \sqrt{\frac{2 \times 4000 \times 80}{4}} = 200$ units.

Therefore, the economic order quantity is 200 units.

Option A is incorrect because it is less than the economic order quantity. Option B is incorrect because it is greater than the economic order quantity. Option C is incorrect because it is equal to the economic order quantity. Option D is incorrect because it is not a valid option.