Part $2$: $-$ Read the below Question and answer the basis of the given questions the formula of EOQ and Re order point.

PART B SOLUTION

Demand $($D$)1200$ Per Month

$14400$ Per Year

Cost of Product $($C$)$ $ $2\mathrm{.}00$

Insurance, Tax etc $20\%$

Cost of Order Placement Co $ $25\mathrm{.}00$ Per Order

Cost of Inventory holding Ch$\text{'}$ $ $0\mathrm{.}40$ Per Case Per year

Lead time L $5$

Daily demand d $57\mathrm{.}6$

EOQ $($Q$)1342$

Total Cost $=$D$/$Q$*$Co$+$Q$/2*$Ch $($Ordering cost $+$ Holding Cost$)$

$ $536\mathrm{.}66$

Total Ordering cost $=$D$/$Q$*$Co $ $268\mathrm{.}33$

Total Holding cost $=$Q$/2*$Ch $ $268\mathrm{.}33$

Reorder Point $($r$)=$ d$*$L $288$

If we order $1200$ Cases per month

Total Cost $=$D$/$Q$*$Co$+$Q$/2*$Ch $($Ordering cost $+$ Holding Cost$)$

$ $540$

Total Ordering cost $=$D$/$Q$*$Co $ $300\mathrm{.}00$

Total Holding cost $=$Q$/2*$Ch $ $240\mathrm{.}00$

Reorder Point $($r$)=$ d$*$L $288$

Please refer word file for final conclusion. answer