Answer No.

1
(a)
EOQ = (2*10000*400 / 10) ^ = 894 Ans
(b)
Number of Orders = 10000/894 = 11 Orders
Order Cost per year = 11 * 400 = 4400
Average EOQ = 894 / 2 = 447
Carrying cost = 447 * 10 = 4470
Total Annual Relevant Cost = 4400 + 4470 = 8870 Ans

(a)
EOQ = (2*10000*200 / 20) ^ = 447 Ans
(b)
Number of Orders = 10000/894 = 11 Orders
Order Cost per year = 11 * 400 = 4400
Average EOQ = 894 / 2 = 447
Carrying cost = 447 * 10 = 4470
Total Annual Relevant Cost = 4400 + 4470 = 8870 Ans

(a)
EOQ = (2*10000*100 / 40) ^ = 224 Ans
(b)
Number of Orders = 10000/224 = 44 Orders
Order Cost per year = 45 * 100 = 4500
Average EOQ = 224 / 2 = 112
Carrying cost = 112 * 40 = 4480
Total Annual Relevant Cost = 4500 + 4480 = 8980 Ans

Answer No 2

As EOQ is referred as the quantity where Total Carrying cost and Total Ordering cost is at
minimum level and hence Total relevant cost is also minimum. This example shows that If
Relevant Carrying cost is increased and Relevant Order is decreased then EOQ decreases but
total relevant cost increases

Answer No. 3

As already calculated at 10 Rs. Relevant Carrying Cost and 400 Rs. Relevant Ordering Cost
EOQ is 894 and Total Relevant cost is 8870 Rs.
And at 20 Rs. Relevant Carrying Cost and 200 Rs. Relevant Ordering Cost EOQ is 447 and Total
Relevant cost is 8880 Rs.
Cost of the Prediction error = 8880 8870 = 10 Ans