Marvel Ltd. uses a large quantity of salt in its production process. Annual consumption is 60,000...

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Marvel Ltd. uses a large quantity of salt in its production process. Annual consumption is 60,000 tons over a 50 week working year. It costs Rs. 100 to initiate and process an order and follow two weeks later. Storage costs of the salt are estimated to be Rs. 0.1 per ton per annum. The current practice is to order twice a year when the stock falls to 10,000 tons. Recommend an appropriate ordering policy for the company in contrast to its current policy. Marvel Ltd. uses a large quantity of salt in its production process. Annual consumption is 60,000 tons over a 50 week working year. It costs Rs. 100 to initiate and process an order and follow two weeks later. Storage costs of the salt are estimated to be Rs. 0.1 per ton per annum. The current practice is to order twice a year when the stock falls to 10,000 tons. Recommend an appropriate ordering policy for the company in contrast to its current policy.

Answer rating: 100% (QA)

To recommend an appropriate ordering policy we need to calculate the economic order quantity EOQ and ... View the full answer