A company annually uses 24,000 units of a raw material, which costs Rs 1.25 per unit. Placing each order costs Rs 22.5 and the carrying cost is 5.4 per cent of the average inventory. Find the economic order quantity, and the total inventory cost (including the cost of material). Should the company accept the offer made by the supplier of a discount of 5 per cent on the cost price of a single order of 24,000 units?

Assume the company works for 300 days in a year. If the procurement time is 12 days and buffer stock is 400 units, find the reorder point, the minimum, maximum and average inventory.

Answer rating: 100% (QA)

To find the Economic Order Quantity EOQ we can use the EOQ formula EOQ sqrtfrac2DSH where D Annual d... View the full answer