---
title: "EOQ and reorder point for rebar"
subject: "Construction Management"
chapter: 3
key: "semester_8/construction_management:eoq-rebar-2071"
source: https://www.bctengineer.com/q/semester_8/construction_management/eoq-rebar-2071
site: BCT Engineering
---

# EOQ and reorder point for rebar

Construction Management · Chapter 3: Planning Construction Material

- Asked in: 2071 Bhadra, 6 marks
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/eoq-rebar-2071
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-3

## Question

Define economic order quantity. Calculate EOQ and reorder point if rebar required is 1000 tonnes; Ordering Cost is Rs. 10,000; Carrying Cost is 15%, rebar rate is Rs. 90,000 per tonne; Safety Stock is 50 tonnes; lead time is 4 day and consumption per day is 50 tonnes.

## Short answer

EOQ minimizes total ordering and carrying costs. Carrying cost =15% of Rs 90,000 = Rs 13,500/tonne/year. EOQ = sqrt(2*1000*10000/13500) ≈ 38.5 tonnes. Reorder point = lead time consumption (4*50 t) + safety stock (50 t) = 250 tonnes.

## Answer

#### Economic order quantity
EOQ is the order size that makes the total of ordering cost and carrying cost a minimum:
$$
EOQ = \sqrt{\frac{2 D C_o}{C_h}}
$$
where $D$ is the annual requirement, $C_o$ the ordering cost per order and $C_h$ the carrying cost per unit per year.

#### Calculation
$D = 1000$ t, $C_o = $ Rs 10,000, carrying cost = 15% of Rs 90,000 = Rs 13,500 per tonne per year.

$$
EOQ = \sqrt{\frac{2 \times 1000 \times 10000}{13500}} = 38.49\ \text{tonnes}
$$

Number of orders = 1000/38.49 = 26.0 per year.

#### Re-order point
Lead-time consumption = 4 days x 50 t/day = 200 t. Safety stock = 50 t.

$$
ROP = 200 + 50 = 250\ \text{tonnes}
$$

**Answer: EOQ = 38.49 tonnes (about 38.5 t); re-order point = 250 tonnes.**

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. EOQ is the order size that:
   A. is the largest possible
   B. minimizes total ordering plus carrying cost
   C. equals annual demand
   D. equals safety stock
   Answer: B. EOQ balances ordering cost and carrying cost to give the minimum total. (Key point: Definition of EOQ)

2. Carrying cost for rebar at 15% of Rs 90,000/t is:
   A. Rs 1,350
   B. Rs 13,500
   C. Rs 90,000
   D. Rs 135,000
   Answer: B. 0.15 x 90,000 = Rs 13,500 per tonne per year. (Key point: Carrying cost)

3. ROP with 4 days lead time, 50 t/day and 50 t safety stock is:
   A. 200 t
   B. 50 t
   C. 250 t
   D. 38.49 t
   Answer: C. Lead-time consumption 200 t + safety stock 50 t = 250 t. (Key point: Reorder point)

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