Itika Sharma runs an online business for eco-friendly water bottles. The annual demand for the HydroSmart bottles is 10,000 units. The annual holding cost per unit is Rs. 40, and the cost to place an order is Rs. 8,000. Calculate the Economic Order Quantity (EOQ) for HydroSmart bottles.

Question

Accepted Answer

Given: Annual demand (D) = 10,000 units, Annual holding cost per unit (C) = ₹40, Cost of placing an order (P) = ₹8,000.

EOQ = √((2 × P × D) / C)
EOQ = √((2 × 8,000 × 10,000) / 40)
EOQ = √(16,00,00,000 / 40)
EOQ = √(40,00,000)
EOQ = 2,000 units.

The Economic Order Quantity for HydroSmart bottles is 2,000 units.