MANAGEMENT SCIENCE | BBA SEM-4 | UNIT-3 EXPLAINATION | 16M OSMANIA UNIVERSITY | ‎⁨@shivanipallela⁩

Added: 2026-05-31

[00:00:03]So, in unit number three, there are two topics of problematic we we need to discuss, now. One is EOQ. Second one is ABC analysis. Okay? So, these are the two problematic methods we need to discuss in unit number three. Okay? So, both are easy and simple topics.

[00:00:24]Okay? So, first we'll complete EOQ. EOQ is a very basic question, simple question, and uh within two minutes or three minutes we can easily solve it.

[00:00:35]So, EOQ stands for economic order quantity. Okay? EOQ formula is 2 AO divided by C under root.

[00:00:50]Okay? This is the formula for EOQ.

[00:00:54]Clear? So, A is nothing about assumption or annual consumption.

[00:01:02]Okay?

[00:01:06]C is nothing about carrying cost.

[00:01:12]O is nothing about ordering cost. Clear?

[00:01:16]So, simply they will give the data we need to substitute in the formula so that answer will be over.

[00:01:23]See here the question.

[00:01:25]Find EOQ from the following data.

[00:01:28]Average annual consumption is 30,000 units. Inventory carrying cost is 12%.

[00:01:36]Carrying cost always they will give it in a percentage. Once you remember that.

[00:01:41]Carrying cost always they will give in percentage. How much percentage they are giving? 12%.

[00:01:48]Cost of placing an order is 70. Okay?

[00:01:52]And ordering cost is 70. Cost per unit is two. So, how to solve the question means see here.

[00:02:02]Given that annual consumption is 30,000 units.

[00:02:09]Yes?

[00:02:11]Next.

[00:02:13]Carrying cost how much percentage they have given? 12%. Okay? Ordering cost how much they have given? 70.

[00:02:20]Per cost, that is per unit how much they have given? Price per unit?

[00:02:27]Two.

[00:02:28]Okay, this is the data they have given.

[00:02:30]I have said no, always carrying cost they will give it in a percentage. So, we need to calculate C. What is the price per unit? Two.

[00:02:40]Into what is the percentage? 12. So, 2 into 12% how much it will be?

[00:02:47]2 into 12% 0.24.

[00:02:52]So, carrying cost is 0.24. Like this you need to calculate carrying cost in every question. After calculating it, what is the formula? EOQ is equal to under root 2 into AO. What is A? 30,000.

[00:03:13]What is O? 70.

[00:03:16]Divided by what is C? 0.24.

[00:03:21]So, 2 into 30,000 into 2 into 30,000 into 70. How much it will be?

[00:03:29]42 lakhs.

[00:03:35]Divided by 0.24 under root. So, divided by 0.24 if you are doing means you are getting the value of 1 lakh 75 1 crore 75 lakhs under root. What is the root value? See here. Here you will find the root value, no? Just click on that. What will be the answer you're getting?

[00:03:56]4183.3 units. So, EOQ is equal to 4183.3 units or 4183 is the answer. Understood, everyone?

[00:04:12]That's it. 12-mark question, this is.

[00:04:17]Clear?

[00:04:19]>> Yes, ma'am.

[00:04:22]>> Next, see here.

[00:04:24]A factory uses 24,000 units of raw materials, which cost 125 per unit. Placing each order is 25.

[00:04:35]Carrying cost is 6. So, carrying cost percentage is 6%. Ordering cost O is 25.

[00:04:42]Cost per unit is 125. Annual consumption is 24,000.

[00:04:48]So, we can find out the economic order quantity. That is nothing about EOQ. You can find it, no?

[00:04:54]You are having A, you are having ordering cost, you are having carrying cost, everything you are having. Just you need to substitute in the formula.

[00:05:03]After that, what they are asking? How many orders are placed in a year?

[00:05:08]Sometimes, they will ask the situation that how many orders placed in a year?

[00:05:15]How many orders placed in a year? How to calculate this one?

[00:05:25]So, what is the formula? Annual consumption annual consumption divided by EOQ, if you are doing means, you will get the how many orders placed in a year. So, for this question, what is the annual consumption? 30,000 units. What is EOQ?

[00:05:48]4183. If you are dividing this with the with this two means 30,000 divided by 4183, if you are doing means 7.171 is the how many orders placed in a year.

[00:06:03]So, this is the answer. Like this you need to calculate it. Clear?

[00:06:09]Next, if they're asking computation of total inventory cost during the year, like that if they're asking is what is the formula?

[00:06:17]Annual ordering cost plus annual holding cost plus cost of material. So, what first you need to calculate annual ordering cost, then you need to calculate annual holding cost, then you need to calculate the purchase of cost material, then after getting all these three, just substitute in this formula, you'll get the total inventory cost.

[00:06:39]What is the total inventory cost? Annual ordering cost plus annual holding cost plus cost of material. First you need to calculate annual ordering cost, for that this is the formula. For annual holding cost, for that this is the formula. For cost of material, this is the formula.

[00:07:00]After substituting every formula, you'll get the value. After getting the value, you need to substitute in the total inventory cost. Only these three we are learning in EOQ. One is economic order quantity, second one is how many orders placed in a year, third one is total inventory cost. These three methods we are discussing in the first point, that is EOQ. Everyone understood?

[00:07:28]Yes?

[00:07:32]Afia and Rohit understood? Any doubt you are having any doubt?

[00:07:37]>> Understood.

[00:07:40]>> So, in EOQ we have learned two other concepts also. How many orders placed in a year? Total inventory cost. That simple is this. If they are asking the problematic from unit number three, first topic is EOQ only. Second is ABC analysis. How to do this ABC analysis?

[00:07:58]See here, they have given quantity uh >> Ma'am, in that EOQ, more two questions are there. They are not important.

[00:08:08]>> What two questions?

[00:08:10]>> More two questions are there in EOQ. In the book, ma'am.

[00:08:15]>> That That That is I will give homework, no, ma'am. This is all you need to do it.

[00:08:20]>> Okay. All are important.

[00:08:22]>> homework.

[00:08:23]>> Okay.

[00:08:24]>> All is important. What I explain, same thing. This is homework problem. After class, I will send the picture.

[00:08:30]>> Okay, ma'am.

[00:08:31]>> Okay?

[00:08:32]>> Okay.

[00:08:32]>> Just two you need to do homework. Here only they have asked total inventory cost and EOQ. But here they have asked EOQ, how many orders placed in a year?

[00:08:42]>> Yes.

[00:08:42]>> Same formula, same method of calculation, but values will be different, okay?

[00:08:46]>> Okay, ma'am.

[00:08:47]>> Next is ABC analysis. Okay?

[00:08:52]ABC analysis, how to calculate this?

[00:08:54]This is also very easy problematic, ma'am. A company uses 12 different items, they are saying. So, item one to item 12 they have given.

[00:09:05]Quantity they have given. Total unit cost also they have given, okay? After giving this, simply what we need to do?

[00:09:13]We need to calculate step number one.

[00:09:17]How to calculate step number one? Only one value will be added in the column.

[00:09:22]What is that? Total cost.

[00:09:24]Item they have given in the question.

[00:09:27]Annual demanded quantity they have given in the question. Unit cost also they have given in the question. In step number one, what we need to calculate?

[00:09:35]We need to calculate total cost. How to calculate total cost? Simply multiply.

[00:09:41]9,000 into 10 is 90,000. 300 into 750 is 225,000.

[00:09:47]5,400 plus 2 5,400 into 210 is 11,34,000.

[00:09:53]Simply you need to do multiplication.

[00:09:56]That is the step number one.

[00:09:58]Whatever the data they have given, no?

[00:10:01]Simply we need to do the multiplication of these two values. And you need to write it in the column. Okay, step number one understood?

[00:10:10]Everyone?

[00:10:12]>> Yes, ma'am.

[00:10:14]>> In the step number two, what we need to do means we need to draw this three column. One is item number. Second one is annual consumption value. Third one is cumulative value.

[00:10:30]Annual consumption value. That is ACB.

[00:10:34]So, here whatever the annual consumption value we have got, that is total cost we have got, no? What is the highest value you are having? 11 lakh.

[00:10:45]That will be in first.

[00:10:49]Okay?

[00:10:53]>> Yes.

[00:10:58]>> So, first highest value you need to write it first. After 11 lakh, highest value is 5 lakh 70. After that 3 lakh.

[00:11:06]After that 2 lakh. After that like that from highest amount to lowest amount you need to write it in that. So, what is the 11 lakh 34,000 item number is?

[00:11:17]Three.

[00:11:18]So, that is also in that sequence order only you need to present it here.

[00:11:24]Clear?

[00:11:25]According to the highest to lowest, according to that item number only you You to clear it. Clear it till here understood? This two values?

[00:11:36]>> Yes, ma'am.

[00:11:38]>> After that, we need to calculate cumulative. How to calculate cumulative?

[00:11:42]What is the first value you are having here? 11 lakh 34,000 no? That will be same. 11 lakh 34,000. 11 lakh 34,000 plus 5 lakh 70,000 is 17 lakh 4,000. 17 lakh 4,000 plus 4 lakh 32,000 is 20 lakh 46,000. 20 lakh 46,000 plus 2 lakh 60,000 is 22 lakh. So, like that in zigzag way, you need to calculate all the cumulative value.

[00:12:10]Clear?

[00:12:15]Understood step number one and step number two in ABC analysis?

[00:12:18]>> Yes, ma'am. Understood.

[00:12:20]>> After that, step number three. In this step number three, whatever the table it is there, it is a fixed table for any problematic question of ABC analysis. So, A, B, C.

[00:12:34]What is the full form of ABC? Always better control.

[00:12:41]This is the full form of ABC. So, for A, it is 70% for B, it is 20% for C, it is 10%. This 70, 20, and 10 whatever you are having, that is fixed. Okay? You should not change that.

[00:12:59]A is always 70, B is always 20, C is always 10%. Clear?

[00:13:07]Then, for category A, you need to calculate the 70%. So, how to calculate that means, what is the total of annual consumption value? 32 lakh 98,250, right? For this, you need to do the 70% Clear? How How to do 70% means simply first you divide it 70 / 100. See 70% means how to calculate means 70 / 100 into total value that is 32 lakh 98,250.

[00:13:47]Clear? How to do this means 70 / 100 into 32 lakh 98,250.

[00:13:58]How much you're getting? 23 lakh 8,775.

[00:14:04]23 lakh 8,775.

[00:14:08]For B how to calculate for B? This how much you got? 23 lakh 8,775 no? Yes? How to check this means you need to check out here.

[00:14:27]This level lakh 17 lakh 20 lakh 22. Here you will get 23 lakh. Yes?

[00:14:35]In this in this row in the serial number seven you will get 23 lakh. So up to 1 2 3 4 5 this five items will be considered in a A category.

[00:14:50]Clear?

[00:14:51]Why I have shown like this only because we got the answer 23 lakh 8,775.

[00:14:57]At what item you will get 23 lakh 8,775?

[00:15:00]You say or no? So this will be all considered in A category. Next how to do B one? You need to add A plus B. That means 70 plus 20 it is 90,000. Yes?

[00:15:16]70 plus 20 is 90,000. See 90%.

[00:15:21]So how to do that 90% of 32 lakh 98,000?

[00:15:26]>> How to do that 90% of 32 lakh 98,000?

[00:15:29]Same. 90 / 100 into 32 lakh 98,000 250.

[00:15:39]Okay?

[00:15:42]Understood that doubt you are having.

[00:15:44]Simply I have you remember in the formula, you will easily understand it.

[00:15:48]Starting material.

[00:15:50]After that this is me. I'm charging with fitting.

[00:15:54]Clear?

[00:15:57]Understanding of you?

[00:16:00]>> Yes, ma'am. I understand.

[00:16:02]>> So, how much answer you are getting? 29 lakh 68,425.

[00:16:07]Here you will get 29 lakh? No. Here you will get 29 lakh? No. In 30 lakh you will get 29 lakh 68,425.

[00:16:15]So, these three items will be considered B category.

[00:16:20]Clear? Remaining all items will consider in C category. That's it.

[00:16:25]That you need to show it.

[00:16:28]Okay? So, A and B you need to calculate.

[00:16:31]After that in step number four, how you need to do it means what is the A category last number? 25 lakh This is the formula wise you need to understand.

[00:16:40]Into 100 you will get 76.89%.

[00:16:44]Next what you need to do? For B category what is the last value? 30 lakh 16,250 divided by 32 lakh 98,250. You will get 91.45.

[00:16:55]Simply what you need to do now? 91 minus 76. You will get the C value.

[00:17:03]14.

[00:17:05]56%.

[00:17:07]Like that you need to show it.

[00:17:08]In A category what are the items will be considered? 3 11 4 10 7. 3 11 4 10 7. In B category these three no? That is 2 9 and 5. That's it. You need to show it this table.

[00:17:23]Clear?

[00:17:28]Understanding or you're having any doubt? In In four steps, we need to calculate ABC analysis. Okay? After writing this values, next you need to plot the graph.

[00:17:41]So, in A category, how many items is there? 0 to 40. 40 to 60. 60 to 100. So, 0 to 40 is A category. 40 to 65 is B category. 65 to 100 is C category. You need to draw the graph. This graph also will be same thing in every question.

[00:18:05]Like this only, the structure of graph will be there for ABC analysis. Clear?

[00:18:14]Clear or you're having any doubts?

[00:18:17]>> Clear, ma'am.

[00:18:19]>> What about you, Rohit?

[00:18:21]>> Clear, ma'am.

[00:18:25]>> So, that's it. ABC analysis is first one.

[00:18:28]Second one is EOQ and number of place items in order. That is inventory total cost. That is all. Okay?

[00:18:39]Okay, now?

[00:18:42]>> Yes.

[00:18:43]>> So, my suggestion to you people is in second unit you are having problematic. In third you are having problematic. In fourth and fifth also you are having problematic. First is completely theory. Okay? In management science, minimum three problematics you need to attempt.

[00:19:00]So, second unit problematic is easy.

[00:19:03]Third unit problematic is also easy.

[00:19:06]Fifth unit is also easy. Fourth unit is little bit difficult. So, you can go with theory in this.

[00:19:14]In this also theory, in this also theory, in this also theory. In every unit one theory question along with that problematic I'll explain. In second also I'll give theory. In third also I'll give one explain theory. Fourth also one theory, fifth also one theory. You need to be perfect with problematic and you need to be perfect with one theory question whatever I have given in my notes.

[00:19:35]That's it.

[00:19:36]Okay?

[00:19:37]So, fourth unit problematic is a little bit difficult.

[00:19:43]It is a little bit difficult, not much difficult in understanding. So, equations will be there. Okay? So, penalty method will be there, big M method will be there, normal method will be there. So, it will be very difficult to understand fourth unit. So, you can easily skip this fourth unit if you are not understanding it, okay? So, one theory question, one problematic question they will ask in the examination. So, be perfect with the second, third, and fifth unit problematic. Remaining fourth and fifth unit be perfect with theory. And second, third, and fifth also you need to learn theory. What do you say?

[00:20:18]Is it fine?

[00:20:24]>> Yes, ma'am.

[00:20:27]>> Because it will be very lengthy to understand. See, first they will give the equation. So, after finding the equations, we need to put it in the LPP format. After LPP format, we need to present it in the simplex table. After presenting it in the simplex table, we need to modify the values. After modifying the values, again we need to write the re-modified values. See, this much lengthy the question is there.

[00:20:51]>> Yes, ma'am.

[00:20:52]>> So, instead of problematic >> In fourth unit we'll definitely get one theory question.

[00:21:00]>> Yeah, one theory, one problematic. In problematic we can discuss, but you are having LPP method in simplex method, LPP in big M method and in simplex again two methods, minimum and maximum. And in big M method also minimum and maximum.

[00:21:16]So, that means 1 2 3 4 5 6 six kind of questions you need to perfect in fourth unit.

[00:21:25]So, instead of remembering all that stuff, just go with the theory. Be perfect with theory from unit number four. Second, third and fifth unit anyway you will perfect with the problem and with no.

[00:21:35]>> Yes, ma'am.

[00:21:37]>> So, that's it. Anyway, I will preparing your note.

[00:21:41]Fourth unit I'll give one question only.

[00:21:43]So, be perfect with that one question.

[00:21:45]Clear?

[00:21:45]>> Okay, ma'am.

[00:21:47]>> You want to Rohit?

[00:21:52]>> He is not there right now.

[00:21:54]>> He was not there?

[00:21:56]>> Yes, ma'am.

[00:21:58]>> Okay, no problem. He was already listen the class in offline.

[00:22:02]Okay, in unit number five, we are having 1 2 3. Okay, it is easy only. Unit number five is easy only.

[00:22:10]>> Okay, ma'am.

[00:22:15]>> So, now what are you doing?

[00:22:16]>> also one there, ma'am. I think. In that problematic is also there, ma'am. In marketing in last unit.

[00:22:23]>> Yeah, in marketing what they are doing means one theory one problematic they are asking. Sometimes both the problematic they are asking. Sometimes both theory they are asking. So, we can't like give a option, no. So, that's why what I'm saying in marketing research only one problematic method I'll explain. That is easy only. No problem.

[00:22:42]>> unit, no?

[00:22:43]>> Yeah, in last unit. Fifth unit already I have explained theory part. Only we are left over with problematic.

[00:22:50]>> Yes, ma'am.

[00:22:51]>> Okay? Now, tomorrow evening class I will take marketing research.

[00:22:56]Okay?

[00:22:57]>> Yes, ma'am.

[00:22:57]>> Tomorrow I problematic and theory also I'll explain at that time only. So, that management science tomorrow it that time only. So that management science tomorrow I'll complete it. So it will be your task to start your preparation.

[00:23:12]>> Yes, ma'am.

[00:23:13]>> Marketing research may problematic is unit here. Management science is fifth unit problematic and theory part. Two, three, four, five theory part.

[00:23:22]>> Yes, ma'am.

[00:23:23]>> Good. I'll prepare my notes, okay?

[00:23:25]>> Okay, ma'am.

[00:23:26]Ma'am, when can you send the important questions together?