Multiple Choice Questions on At EOQ the ordering cost and Carrying cost are ........ for SEBI Grade A ( Officer) Exam Preparation

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Multiple Choice Questions

At EOQ the ordering cost and Carrying cost are ........

Costing - Phase (I & II) Basics of Cost Control and Analysis
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    At EOQ, the ordering cost and Carrying cost are:

    Both are equal

    Correct Answer

    Ordering cost is less than carrying cost

    Incorrect Answer

    Carrying cost is less than ordering cost

    Incorrect Answer

    Any of the above

    Incorrect Answer
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    Explanation:

    Economic Order Quantity (EOQ) is the quantity to be ordered at one time to minimize the overall variable cost i.e. total ordering cost and carrying cost. At this quantity, the carrying cost = ordering cost .

    It is calculated as:

    √ 2 (x) C (x) O/ I

    Where, C= Annual Consumption

    O= Ordering cost per order

    I= Inventory Carrying Cost per unit per annum (% on Purchase price per unit)

    By: Vikas Goyal
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    Let's Discuss

    Durgesh

    Both are minimum, not equal.

    0 0 reply

    NIHARIKA WALIA

    Both are minimum and equal

     0 0 reply
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