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Kwality Stores is famous for its woollen garments sourced from
Ludhiana. Its most popular selling item is its sweat-shirt which is sold at
1,000 per piece. The cost of placing an order and receiving goods is
₹ * 500 per order. Its holding cost is 300 p.a. Economic order quantity
for Kwality Stores is 200 sweat-shirts.
Calculate the annual demand of the sweat-shirts.

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azikennamdi

The Annual Demand of the Sweat-Shirts is: 16 Sweat Shirts/Annum. The steps for calculating this is given below.

How do you calculate Annual Demand?

The following process outlines the process for calculating Annual Demand.

  • Multiply steady demand by two.
  • Multiply the result by the cost of ordering one unit.
  • Divide the result by the cost of holding one unit in inventory for a year.
  • Then, take the square root of the total.

This process applied is:

Steady demand here is: 200. Thus

200 X 2  = 400

400 * (200/500) = 160

160/(200/300) = 240

Annual Demand = [tex]\sqrt{240}[/tex]

= 15.4919333848

≈ 15.5. given that the item cannot be divisible by two, we can leave the answer at 16 Sweat Shirts/Annum.

Learn more about Annual Demand at:

https://brainly.com/question/26814787

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