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- Economic Order Quantity (EOQ)

This question was previously asked in

GATE PI 2020 Official Paper

**Concepts:**

Economic Production Quantity,

\(EPQ =\sqrt{\frac{2DC_o}{C_h} \times \frac{p}{p -d}}\)

where p = production quantity per day, d = demand per day, D = annual demand, C_{o} = ordering cost, C_{h} = holding cost.

**Calculation:**

**Given:**

p = 200 units per day, D = 15000 units per year, C_{o} = Rs 200, C_{h} = Rs. 2 per unit per year,

Operating days (n) = 300 days,

\(d = \frac{D}{n}\)

\(d = \frac{15000}{300}\)

d = 50 units per days

\(EPQ =\sqrt{ \frac{2DC_o}{C_h} \times \frac{p}{p -d}}\)

\(EPQ =\sqrt{ \frac{2\; \times\; 15000\ \times\ 200}{2}\times \frac{200}{200\ -\ 50}}\)

**EPQ = 2000 units.**

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