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Discussion :: Industrial Engineering and Prod'n Mgmt

  1. If A is the total items consumed per year, P is the procurement cost per order, and C is the annual inventory carrying cost per item, then the most economic ordering quantity is given by

    2. A.

     AP/C
    B.

     2AP/C
    C.

     √(2AP/C)
    D.

     (AP/C)²

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    Answer : Option C

    Explanation :

    If A is the total items consumed per year, P is the procurement cost per order, and C is the annual inventory carrying cost per item, then the most economic ordering quantity is given by √(2AP/C)

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