XYZ Ltd. has an annual requirement for a certain material of 500 tonnes. The ordering cost per order is ₹6,250 and the stock holding cost is estimated at 25% of the material cost per annum. You are required to: Compute E

Computation of Economic Order Quantity (EOQ) Given: Annual Requirement (A) = 500 tonnes Ordering Cost per order (O) = ₹6,250 Stock Holding Cost (carrying cost) = 25% of material cost per annum Price per tonne = ₹5,250 Calculation of Carrying Cost per unit per annum (Ci): Ci = 25% of ₹5,250 = 0.25 × ₹5,250 = ₹1,312.50 EOQ Formula: EOQ = √(2AO / Ci) Where: A = Annual requirement for the material O = Ordering cost per order Ci = Carrying cost per unit per annum Calculation: EOQ = √((2 × 500 × 6250) / 1312.50) EOQ = √(6,250,000 / 1312.50) EOQ = √(4761.90) EOQ ≈ 69 tonnes The Economic Order Quantity (EOQ) is approximately 69 tonnes.