Question

There are two products P and Q with the following characteristics

Product	Demand (units)	Order cost (Rs/order)	Holding Cost (Rs. unit/year)
P	100	50	4
Q	400	50	1

The economic Order Quantity (EOQ) of products P and Q will be in the ratio

• A. 1 : 1
• B. 1 : 8
• C. 1 : 2
• D. 1 : 4

Answer 1

The correct option is D 1 : 4

$\text{Given that,}$

$D_P=100,D_Q=400$

$(EOQ{)}_P=\sqrt{\frac{2D{C}_0}{C_h}}=\sqrt{\frac{2\times 50\times 100}{4}}=50$

$(EOQ{)}_Q=\sqrt{\frac{2D{C}_0}{C_h}}=\sqrt{\frac{2\times 50\times 400}{1}}=200$

$\therefore \frac{(EOQ{)}_P}{(EOQ{)}_Q}=\frac{50}{200}=\frac{1}{4}$