Kwality Stores is famous for its woollen garments sourced from Ludhiana. Its most popular selling item is its sweat-shirt which is sold at ₹ 1,000 per piece. The cost of placing an order and receiving goods is ₹ 500 per order. Its holding cost is ₹ 300 p.a. Economic order quantity for Kwality Stores is 200 sweat-shirts. Calculate the annual demand of the sweat-shirts.

Question

Accepted Answer

(This is a duplicate of question at index 33)

Given:
- Selling Price per sweat-shirt = Rs.1,000
- Cost of placing an order (P) = Rs.500 per order
- Holding cost (C) = Rs.300 per annum
- EOQ = 200 sweat-shirts

Using the EOQ formula:
EOQ = sqrt((2 x P x D) / C)

Solving for D:
D = (EOQ^2 x C) / (2 x P)
D = (200^2 x 300) / (2 x 500)
D = (40,000 x 300) / 1,000
D = 12,00,000 / 1,000
D = 12,000

The annual demand for sweat-shirts is **12,000 units**.