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Question

An item is produced at the rate of 50 items per day. The demand occurs at the rate of 25 items per day. if the setup cost is Rs. 100 per setup and holding cost is RS. 0.01 per unit item per day. Find the economic lot size for one run, (assuming that shortages are not permitted)

A
707
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B
500
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C
1000
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D
205
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Solution

The correct option is C 1000
Given data:

P = 50 per day

d = 25 per day

Cs= Rs 100 per set up

Ch=0.01 per item per day


EOQ=2Cs×dCh×PPd

=2×100×250.01×5025=1000

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