Production depts: P1, P2 Service depts: S1, S2
[ EOQ = \sqrt{\frac{2 \times 12000 \times 150}{50 \times 0.20}} = \sqrt{\frac{36,00,000}{10}} = \sqrt{3,60,000} = 600 \text{ units} ] Cost Accounting Basu Das Solution
= (Max usage × Max lead time) or (Avg usage × Avg lead time) + Safety stock Here, Avg daily usage = 12,000 / 300 = 40 units Reorder level = (40 × 15) + 200 = 600 + 200 = 800 units Production depts: P1, P2 Service depts: S1, S2
Annual consumption = 12,000 units Ordering cost = ₹150 per order Inventory holding cost = 20% of purchase price Purchase price = ₹50 per unit Lead time = 15 days Annual working days = 300 Safety stock = 200 units ✅ Step-by-step solution: 1. Economic Order Quantity (EOQ) [ EOQ = \sqrt{\frac{2 \times A \times O}{C \times i}} ] Where A = Annual consumption, O = Ordering cost, C = Cost per unit, i = Holding cost % Production depts: P1