GATE ME 2026 Set 1 — Question 61
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Industrial Engineering → Inventory Control → EOQ Model
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Question
The inventory holding cost of an item is ₹ 0.50 per unit per month and the ordering cost per order is ₹ 550. A stockist needs to supply 10000 units of the item per year to the customers. Assume demand is fixed and shortage cost is infinite. Using classical economic order quantity (EOQ) model, the optimal lot size is ________ units per order (rounded off to nearest integer).
Correct answer
1353 to 1355
Solution
Given data:
Annual demand () = 10000 units/year
Ordering cost () = ₹ 550/order
Holding cost () = ₹ 0.50 per unit per month
First, convert the holding cost to an annual basis:
per unit per yearUsing the classical Economic Order Quantity (EOQ) formula:Rounding off to the nearest integer, the optimal lot size is 1354 units.
Annual demand () = 10000 units/year
Ordering cost () = ₹ 550/order
Holding cost () = ₹ 0.50 per unit per month
First, convert the holding cost to an annual basis:
per unit per yearUsing the classical Economic Order Quantity (EOQ) formula:Rounding off to the nearest integer, the optimal lot size is 1354 units.
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