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      Question

      ABC Company supplies plastic crockery to fast food

      restaurants in metropolitan city. One of its products is a special bowl, disposable after initial use, for serving soups to its customers. Bowls are sold in pack 10 pieces at a price of Rs.50 per pack. The demand for plastic bowl has been forecasted at a fairly steady rate of 40,000 packs every year. The company purchases the bowl direct from manufacturer at Rs.40 per pack within a three days lead time. The ordering and related cost is Rs.8 per order. The storage cost is 10% per annum of average inventory investment. Calculate the EOQ.
      A 100 Correct Answer Incorrect Answer
      B 200 Correct Answer Incorrect Answer
      C 300 Correct Answer Incorrect Answer
      D 400 Correct Answer Incorrect Answer
      E 500 Correct Answer Incorrect Answer

      Solution

      Economic Order Quantity EOQ = √ 2 x A x O / Ci = √ 2 x 40,000 packs x 8 / 40 x 10% = 400 packs 

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