{"id":194496,"date":"2025-02-24T08:05:05","date_gmt":"2025-02-24T08:05:05","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=194496"},"modified":"2025-02-24T08:05:08","modified_gmt":"2025-02-24T08:05:08","slug":"calculate-eoq-and-plot-a-graph-with-the-following-information","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/24\/calculate-eoq-and-plot-a-graph-with-the-following-information\/","title":{"rendered":"Calculate EOQ and plot a graph with the following information"},"content":{"rendered":"\n

Calculate EOQ and plot a graph with the following information.
Annual Usage= 1600 units
Holding Cost= $8 unit\/yr
Ordering Cost = $100 unit\/yr
Price of per Unit= $50<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Economic Order Quantity (EOQ) Calculation and Analysis<\/h3>\n\n\n\n

EOQ Calculation<\/strong><\/h4>\n\n\n\n

The Economic Order Quantity (EOQ) is calculated using the formula:<\/p>\n\n\n\n

[
EOQ = \\sqrt{\\frac{2DS}{H}}
]<\/p>\n\n\n\n

where:<\/p>\n\n\n\n

    \n
  • ( D = 1600 ) units\/year (Annual Demand),<\/li>\n\n\n\n
  • ( S = 100 ) per order (Ordering Cost),<\/li>\n\n\n\n
  • ( H = 8 ) per unit\/year (Holding Cost).<\/li>\n<\/ul>\n\n\n\n

    [
    EOQ = \\sqrt{\\frac{2 \\times 1600 \\times 100}{8}} = \\sqrt{40000} = 200 \\text{ units}
    ]<\/p>\n\n\n\n

    Thus, the EOQ is 200 units<\/strong>, meaning that ordering 200 units at a time minimizes the total inventory cost.<\/p>\n\n\n\n

    Graph Explanation<\/strong><\/h4>\n\n\n\n

    The graph displays the relationship between different order quantities and their corresponding total costs. The total cost consists of:<\/p>\n\n\n\n

      \n
    1. Ordering Cost<\/strong>: Decreases as the order size increases since fewer orders are placed per year.<\/li>\n\n\n\n
    2. Holding Cost<\/strong>: Increases with order size since more inventory is held at any given time.<\/li>\n\n\n\n
    3. Total Cost<\/strong>: The sum of holding and ordering costs. The EOQ point (200 units) is marked, where total cost is minimized.<\/li>\n<\/ol>\n\n\n\n

      From the plotted graph, you can observe that ordering quantities much lower or much higher than 200 units results in higher costs, confirming EOQ as the optimal order quantity.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Calculate EOQ and plot a graph with the following information. Annual Usage= 1600 units Holding Cost= $8 unit\/yr Ordering Cost = $100 unit\/yr Price of per Unit= $50 The Correct Answer and Explanation is : Economic Order Quantity (EOQ) Calculation and Analysis EOQ Calculation The Economic Order Quantity (EOQ) is calculated using the formula: [EOQ […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-194496","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/194496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=194496"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/194496\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=194496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=194496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=194496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}