The Economic Order Quantity (EOQ) is a fundamental concept in inventory management that helps businesses determine the optimal order quantity to minimize costs. In this article, we will explore example problems with solutions in PDF format to help you understand the EOQ concept better.
What is Economic Order Quantity (EOQ)?
The EOQ is a mathematical formula that calculates the optimal order quantity by balancing the ordering cost and the carrying cost. The formula is: EOQ = √(2AB/C), where A is the annual demand, B is the ordering cost, and C is the carrying cost per unit.
Example Problems with Solutions
Here are a few example problems with solutions to help you understand the EOQ concept:
- Problem 1: A company has an annual demand of 1000 units, an ordering cost of $10 per order, and a carrying cost of $2 per unit. What is the EOQ?
- Solution: EOQ = √(2 x 1000 x 10 / 2) = √10000 = 100 units
- Problem 2: A company has a quarterly demand of 500 units, an ordering cost of $20 per order, and a carrying cost of $5 per unit. What is the EOQ?
- Solution: First, convert the quarterly demand to annual demand: 500 x 4 = 2000 units. Then, calculate the EOQ: EOQ = √(2 x 2000 x 20 / 5) = √16000 = 126.49 units
- Problem 3: A company has an annual demand of 5000 units, an ordering cost of $15 per order, and a carrying cost of $3 per unit. What is the EOQ?
- Solution: EOQ = √(2 x 5000 x 15 / 3) = √50000 = 223.61 units
Download Example Problems with Solutions PDF
You can download example problems with solutions in PDF format from various online resources, such as:
- Example Problems with Solutions PDF
- eGyanKosh ⎼ Economic Order Quantity Problems and Solutions
- ResearchGate ⎼ Economic Order Quantity Problems and Solutions
References
The following resources were used to create this article:
- Lukinskii V.S., Vorobeva N.I. (2019). Modified economic order quantity (EOQ) model with discounts.
- GT Glembotskaya (2024). Numericals of Economic Order Quantity.
- eGyanKosh. (n.d.). Economic Order Quantity Problems and Solutions.