annual consumption value = 10000 rs Ordering cost= Rs 40 and carrying cost= 10% can we calculate EOQ
Is it possible to calculate EOQ from this data ?
Yes.
I don’t have a copy of the CFA Institute books at hand, but I’d imagine that if _ q _ is the order quantity, then we assume that we sell uniformly throughout the year and replenish just when we run out, so our average inventory is _ q _/2, and our storage cost is 10% × _ q _/2 = 5% × _ q _. The number of orders is 10,000 ÷ _ q _, so our total cost is:
_ C _ = 5% × _ q _ + 10,000/_ q _
When you compute d_ C /d q _, set it equal to zero, and solve for _ q _, you get:
_ q _ = √(10,000/5%) = 2,828.
(Because you pay the full order cost no matter what size the order is, you’ll want order sizes that divide evenly into 10,000: check the cost of 2,500 and 3,333. You’ll find the minimum cost at 4 orders of 2,500 each.)
which reading is EOQ from? I dont think schwser covered this
Relying on 3rd party providers will get you in trouble my friend.
where is it from
Don’t worry, not from the curriculum.
Aether any link to supoort such a calculation ?
Not even sure where you found this. This is definitely not in the 56 readings I’ve read. Are you using old books, or something?
No this is a general concept someone asked me . I said u cant calculate EOQ with such limited info
Exactly my point… why would I waste time helping someone with some random concept when I can’t even remember my own CFA crap :). pierrewoodman was shitting his pants, thinking this was from the curriculum.
fucking CMLSML doesnt know its outside of curriculum either, relying on 1st party provideer got you in trouble
LMAO.