Problem # 1: 

Calculate Economic Order Quantity (EOQ) from the following:

Annual consumption           6,000 units

Cost of ordering                 Rs. 60

Carrying costs                    Rs. 2


Economic Order Quantity (EOQ)

EOQ =600 Units

>> More Reading Economic Order Quantity.


Problem # 2: 

From the following particulars, calculate the Economic Order Quantity (EOQ):

Annual requirements          1,600 units                          Cost of materials per units                      Rs. 40

Cost of placing and receiving one order:      Rs. 50       Annual carrying cost for inventory value       10%




EOQ = 200 Units

>> More Reading Inventory Management.


Problem # 3:

Calculate EOQ from the following?

Consumption during the year = 600 units              Ordering cost Rs. 12 per order

Carrying cost 20%                                                  Selling Price per unit Rs. 20



economic order quantity problems and solutions

Economic Order Quantity = 379 Units

>> Practice Inventory Management Problems and Solutions.


Problem # 4: 

A manufacturer buys certain equipment form suppliers at Rs. 30 per unit. Total annual needs are 800 units. The following further data are available:

Annual return on investments 10%                    Rent, insurance, storing per unit per year Rs. 2

Cost of placing an order Rs. 100

Required: EOQ



eoq problems and solutions

EOQ = 200 Units

>> More Reading Cost of Goods Sold.



Problem # 5: 

From the figures given below, calculate Economic Order Quantity (EOQ) and Total cost at EOQ?

Total consumption of material per year         10,000 kgs                Buying cost per order Rs. 50

Unit cost of material                                        Rs. 2 per kg            Carrying and storage cost 8%



economic order quantity

EOQ = 2,500 Units


Total Inventory Cost = [Fixed ordering cost (F) * Number of Order per year N] + [Carrying Cost (C)* EOQ/2]

Total Inventory Cost = [50 * 10,000/2,500] + [(2*0.08)* 2,500/2]

Total Inventory Cost = 200 + 200

Total Inventory Cost = Rs.  400


>> More Reading Costing .


  1. Arun

    I have calculated the EOQ . Now i want to order the items on 2 week basis.
    How can I redefine the formula.

  2. Johannes Obasanjo Haukena

    What do we mean when we talk about Normal usage in units per year? is it the same as consumption?

    • Johannes Obasanjo Haukena

      Can you work out for me this problem?

      Normal delivery time: 2.5 weeks
      Maximum delivery time: 3.5 weeks
      Normal usage: 52 000 units per year
      Purchase price per unit: N$8.50
      Cost of placing an order: N$18.00
      Interest rate: 2% per year
      Storing cost per unit: N$2.50

      2.2.1 Calculate the Economic Order Quantity (EOQ). [5]
      2.2.2 Calculate the re-order point if the organisation does not keep safety (minimum level) inventory. [2]
      2.2.3 Calculate the re-order point if the organisation has a policy to keep safety inventory. [2]
      2.2.4 Calculate the safety inventory that should be kept by the organisation. [2]
      2.2.5 Using your answers to the calculations above where relevant, calculate the company’s total inventory costs (holding plus ordering) for the year. [4]

      Thank you

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    it’s really helpful for us, keep it up !!!!!!!

    I also didn’t understand Q3 Holding cost?

    • Ama

      I suppose question 3 EOQ should have been 60 units

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  10. Ahsan Ahmed

    I didn’t understand problem 3 where UC =1 and CC=10%????

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