Aditya Bearings Ltd. are the manufacturers and suppliers of ball bearings to fan manufacturing companies. The company requires 900 kg of wrought iron for its production process. The cost of placing each order is Rs.50 and carrying cost is Rs.100. Calculate Economic Order Quantity.

Question

Accepted Answer

Given:
- Annual requirement (D) = 900 kg of wrought iron
- Cost of placing each order (P) = ₹50
- Carrying cost per unit per year (C) = ₹100

**Calculation of EOQ:**
EOQ = √((2 × P × D) / C)
= √((2 × 50 × 900) / 100)
= √(90,000 / 100)
= √900
= **30 kg**

The Economic Order Quantity for Aditya Bearings Ltd. is **30 kg**. This means the company should order 30 kg of wrought iron each time to minimise total inventory costs.