00:01
So, let's have a look at the question we have been given that a company only uses 10 ,000 units of an item which are bought at the cost of 5 each.
00:09
It costs 25 each, time -based to add up and regardless of the quantity order, holding cost is 10 % of the value of the average inventory.
00:17
We have to find the optimum size of the order amount in the given problem company requires 10 ,000 units per year.
00:41
Annual demand, d is equal to 10 ,000 units.
00:58
Ordering cost, c0 is 25.
01:09
Cost of each item is 5 each.
01:23
The holding cost unit per year, 10 % of the cost of an item, 10 upon 100 multiplied by is 1 by 2, that is 0 .5.
01:49
The holding cost is 0 .5.
01:59
Now, for a o q, that is q r would be 2 b c0 by, that would be 2 multiplied by 10 ,000 multiplied by 25 divided by 0 .5.
02:17
Our economic order quantity would come out to be 1 ,000.
02:31
So, when our quantity is rupees 1 ,000, our optimum order size would be d by q bar, that is 10 ,000 by 1 ,000.
02:55
That we have coined out, q star here and it would be equal to 10.
03:03
The optimum order size is 10, which is the answer for the first part...