a. Compare P-System and Q-system of inventory control. (4 marks) b. A manufacturing organization is using...

 

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a. Compare P-System and Q-system of inventory control. (4 marks) b. A manufacturing organization is using a certain raw material, which is consumed in large quantitates by various products. The raw material is procured from a local supplier. An extract of the relevant records from the stores indicates the following details about the component: Mean weekly demand = 200 SD of weekly demand = 40 Unit cost of raw material = Rs. 300 Ordering cost Rs. 460 Carrying cost percentage = 20% per annum The purchase department has indicated that the lead time for procurement of this raw material is two weeks. Past experience with the supplier suggests that there is no uncertainty w.r.t the lead time. The organization has been using EOQ model for the purpose of scheduling orders. However, there is a general feeling that it is not working satisfactorily. It is not uncommon for the organization to experience stock-outs. Work out the parameters of the P and Q systems of inventory control for a 95% service level. What are your observations on the level of safety stock required to run the operations under each of these systems? (6 marks) a. Compare P-System and Q-system of inventory control. (4 marks) b. A manufacturing organization is using a certain raw material, which is consumed in large quantitates by various products. The raw material is procured from a local supplier. An extract of the relevant records from the stores indicates the following details about the component: Mean weekly demand = 200 SD of weekly demand = 40 Unit cost of raw material = Rs. 300 Ordering cost Rs. 460 Carrying cost percentage = 20% per annum The purchase department has indicated that the lead time for procurement of this raw material is two weeks. Past experience with the supplier suggests that there is no uncertainty w.r.t the lead time. The organization has been using EOQ model for the purpose of scheduling orders. However, there is a general feeling that it is not working satisfactorily. It is not uncommon for the organization to experience stock-outs. Work out the parameters of the P and Q systems of inventory control for a 95% service level. What are your observations on the level of safety stock required to run the operations under each of these systems? (6 marks)