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GATE Mechanical 2024 | Question: 28

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​​​​A company orders gears in conditions identical to those considered in the economic order quantity $\text{(EOQ)}$ model in inventory control. The annual demand is $8000$ gears, the cost per order is $300$ rupees, and the holding cost is $12$ rupees per month per gear. The company uses an order size that is $25 \%$ more than the optimal order quantity determined by the $\text{EOQ}$ model. The percentage change in the total cost of ordering and holding inventory from that associated with the optimal order quantity is

  1. $2.5$
  2. $5$
  3. $0$
  4. $12.5$
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