ECONOMICS

Detailed explanation-1: -Economic Batch Quantity(EBQ)=2AO/C C= Carrying Cost, it includes storage costs, obsolescence of inventory, interest costs and depreciation. O= Ordering or the setting up cost, it includes the cost of installing and setting up machinery for manufacturing. 2 remains constant in the formula.

Detailed explanation-2: -In inventory management, Economic Batch Quantity (EBQ), also known as Optimum Batch Quantity (OBQ) is a measure used to determine the quantity of units that can be produced at the minimum average costs in a given batch or product run.

Detailed explanation-3: -A = Demand of components in a year. O = Setting up cost per batch. C = Cost of capital and storage (carrying cost) per unit per annum.