{"id":47335,"date":"2024-04-15T22:25:18","date_gmt":"2024-04-15T22:25:18","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=47335"},"modified":"2024-04-15T22:25:18","modified_gmt":"2024-04-15T22:25:18","slug":"a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/","title":{"rendered":"A firm consumes 90,000 units of a certain item of raw material in its production process annually. It costs Rs. 3 per unit, the cost per purchase order is Rs. 300 and the inventory carrying cost is 20% per year. What is the EOQ?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;9470 units&#8221; option2=&#8221;9487 units&#8221; option3=&#8221;9480 units&#8221; option4=&#8221;9840 units&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The economic order quantity (EOQ) is the optimal quantity of a product to order at a time in order to minimize the total inventory costs. It is calculated by taking into account the following factors:<\/p>\n<ul>\n<li>The annual demand for the product<\/li>\n<li>The cost of placing an order<\/li>\n<li>The cost of carrying inventory<\/li>\n<li>The cost of the product<\/li>\n<\/ul>\n<p>The EOQ can be calculated using the following formula:<\/p>\n<p>EOQ = \u00e2\u0088\u009a(2 * D * Cp \/ IC)<\/p>\n<p>where:<\/p>\n<ul>\n<li>D = annual demand for the product<\/li>\n<li>Cp = cost of placing an order<\/li>\n<li>IC = inventory carrying cost<\/li>\n<\/ul>\n<p>In this case, we are given the following information:<\/p>\n<ul>\n<li>D = 90,000 units<\/li>\n<li>Cp = Rs. 300<\/li>\n<li>IC = 20% per year<\/li>\n<\/ul>\n<p>Substituting these values into the formula, we get:<\/p>\n<p>EOQ = \u00e2\u0088\u009a(2 * 90,000 * 300 \/ 0.2) = 9470 units<\/p>\n<p>Therefore, the EOQ for this product is 9470 units.<\/p>\n<p>The other options are incorrect because they do not represent the EOQ for this product.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;9470 units&#8221; option2=&#8221;9487 units&#8221; option3=&#8221;9480 units&#8221; option4=&#8221;9840 units&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-47335","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A firm consumes 90,000 units of a certain item of raw material in its production process annually. It costs Rs. 3 per unit, the cost per purchase order is Rs. 300 and the inventory carrying cost is 20% per year. What is the EOQ?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A firm consumes 90,000 units of a certain item of raw material in its production process annually. It costs Rs. 3 per unit, the cost per purchase order is Rs. 300 and the inventory carrying cost is 20% per year. What is the EOQ?\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;9470 units&#8221; option2=&#8221;9487 units&#8221; option3=&#8221;9480 units&#8221; option4=&#8221;9840 units&#8221; correct=&#8221;option3&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-15T22:25:18+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"A firm consumes 90,000 units of a certain item of raw material in its production process annually. It costs Rs. 3 per unit, the cost per purchase order is Rs. 300 and the inventory carrying cost is 20% per year. What is the EOQ?","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/","og_locale":"en_US","og_type":"article","og_title":"A firm consumes 90,000 units of a certain item of raw material in its production process annually. It costs Rs. 3 per unit, the cost per purchase order is Rs. 300 and the inventory carrying cost is 20% per year. What is the EOQ?","og_description":"[amp_mcq option1=&#8221;9470 units&#8221; option2=&#8221;9487 units&#8221; option3=&#8221;9480 units&#8221; option4=&#8221;9840 units&#8221; correct=&#8221;option3&#8243;]","og_url":"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2024-04-15T22:25:18+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/","url":"https:\/\/exam.pscnotes.com\/mcq\/a-firm-consumes-90000-units-of-a-certain-item-of-raw-material-in-its-production-process-annually-it-costs-rs-3-per-unit-the-cost-per-purchase-order-is-rs-300-and-the-inventory-carrying-cost-is-20\/","name":"A firm consumes 90,000 units of a certain item of raw material in its production process annually. 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