{"id":59218,"date":"2024-04-16T01:33:16","date_gmt":"2024-04-16T01:33:16","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=59218"},"modified":"2024-04-16T01:33:16","modified_gmt":"2024-04-16T01:33:16","slug":"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-econo","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/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-econo\/","title":{"rendered":"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"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;566 units&#8221; option2=&#8221;800 units&#8221; option3=&#8221;2530 units&#8221; option4=&#8221;900 units&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is A. 566 units.<\/p>\n<p>The economic order quantity (EOQ) is the order quantity that minimizes the total annual cost of ordering and carrying inventory. It can be calculated using the following formula:<\/p>\n<p>EOQ = \u00e2\u0088\u009a(2DC\/h)<\/p>\n<p>where:<\/p>\n<p>D = annual demand in units<\/p>\n<p>C = ordering cost per order<\/p>\n<p>h = carrying cost per unit per year<\/p>\n<p>In this case, we are given the following information:<\/p>\n<p>D = 8000 units<\/p>\n<p>C = 30<\/p>\n<p>h = 0.075<\/p>\n<p>Substituting these values into the formula, we get:<\/p>\n<p>EOQ = \u00e2\u0088\u009a(2<em>8000<\/em>30\/0.075) = 566 units<\/p>\n<p>Therefore, the economic order quantity is 566 units.<\/p>\n<p>Option B is incorrect because it is the order quantity that minimizes the ordering cost. Option C is incorrect because it is the order quantity that minimizes the carrying cost. Option D is incorrect because it is the order quantity that minimizes the total annual cost of ordering and carrying inventory.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;566 units&#8221; option2=&#8221;800 units&#8221; option3=&#8221;2530 units&#8221; option4=&#8221;900 units&#8221; correct=&#8221;option1&#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-59218","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 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<\/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-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-econo\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"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\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;566 units&#8221; option2=&#8221;800 units&#8221; option3=&#8221;2530 units&#8221; option4=&#8221;900 units&#8221; correct=&#8221;option1&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/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-econo\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-16T01:33:16+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 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","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-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-econo\/","og_locale":"en_US","og_type":"article","og_title":"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","og_description":"[amp_mcq option1=&#8221;566 units&#8221; option2=&#8221;800 units&#8221; option3=&#8221;2530 units&#8221; option4=&#8221;900 units&#8221; correct=&#8221;option1&#8243;]","og_url":"https:\/\/exam.pscnotes.com\/mcq\/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-econo\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2024-04-16T01:33:16+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-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-econo\/","url":"https:\/\/exam.pscnotes.com\/mcq\/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-econo\/","name":"A company buys 8000 units of an item for its annual requirement. 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