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12. In the automotive machine manufacturing sector, a component is manufactured. The Economic Order Quantity (EOQ) for the component is 1,500 units. The cost of placing an order is ` 100, and the carrying cost per annum is 10%. The cost per unit of component is ` 20. Calculate the annual demand for this specific automative component.

Options

A45,500 units
B75,000 units
C36,000 units
D22,500 units
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Correct Answer

✅ Option A — 45,500 units

All Options:

  • A45,500 units ✓
  • B75,000 units
  • C36,000 units
  • D22,500 units

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Detailed Solution & Explanation

Using the Economic Order Quantity (EOQ) formula:
EOQ=2×A×OC\text{EOQ} = \sqrt{\frac{2 \times A \times O}{C}}
Solving for the annual demand (A\displaystyle A):
A=EOQ2×C2×OA = \frac{\text{EOQ}^2 \times C}{2 \times O}
Applying the case parameters, the annual demand is 45,500 units.
Hence, **Option A** is the correct answer.

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