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    Q7 I) With D 50000 Units, C rs20 Per Unit, Co Rs200per Order, and H 20% of rs20 Rs4/unt/year, We Have EOQ ( (2 Co D) / H)

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    Harshita Sharma
    This document summarizes the calculations for determining the economic order quantity (EOQ) and total relevant costs for inventory management with the following parameters: Demand = 50,000 units Ordering cost = Rs. 200 per order Holding cost = 20% of unit cost per year (Rs. 4 per unit per year) The EOQ is calculated as 2,236 units and the length of the order cycle is 16 days. With 6 orders of 8,333 units each, the total relevant cost is Rs. 17,866. Changing some parameters, the new optimal EOQ is 12,910 units with a total relevant cost of Rs. 38,730. The actual cost under the original

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    Q7 I) With D 50000 Units, C rs20 Per Unit, Co Rs200per Order, and H 20% of rs20 Rs4/unt/year, We Have EOQ ( (2 Co D) / H)

    Uploaded by

    Harshita Sharma
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    This document summarizes the calculations for determining the economic order quantity (EOQ) and total relevant costs for inventory management with the following parameters: Demand = 50,000 units Ordering cost = Rs. 200 per order Holding cost = 20% of unit cost per year (Rs. 4 per unit per year) The EOQ is calculated as 2,236 units and the length of the order cycle is 16 days. With 6 orders of 8,333 units each, the total relevant cost is Rs. 17,866. Changing some parameters, the new optimal EOQ is 12,910 units with a total relevant cost of Rs. 38,730. The actual cost under the original

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    operations management

    Original Title

    OM2 Q7

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    This document summarizes the calculations for determining the economic order quantity (EOQ) and total relevant costs for inventory management with the following parameters: Demand = 50,000 units Ordering cost = Rs. 200 per order Holding cost = 20% of unit cost per year (Rs. 4 per unit per year) The EOQ is calculated as 2,236 units and the length of the order cycle is 16 days. With 6 orders of 8,333 units each, the total relevant cost is Rs. 17,866. Changing some parameters, the new optimal EOQ is 12,910 units with a total relevant cost of Rs. 38,730. The actual cost under the original

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    4 views2 pages

    Q7 I) With D 50000 Units, C rs20 Per Unit, Co Rs200per Order, and H 20% of rs20 Rs4/unt/year, We Have EOQ ( (2 Co D) / H)

    Uploaded by

    Harshita Sharma
    This document summarizes the calculations for determining the economic order quantity (EOQ) and total relevant costs for inventory management with the following parameters: Demand = 50,000 units Ordering cost = Rs. 200 per order Holding cost = 20% of unit cost per year (Rs. 4 per unit per year) The EOQ is calculated as 2,236 units and the length of the order cycle is 16 days. With 6 orders of 8,333 units each, the total relevant cost is Rs. 17,866. Changing some parameters, the new optimal EOQ is 12,910 units with a total relevant cost of Rs. 38,730. The actual cost under the original

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    of 2

    Q7 i) with D=50000 units, c=rs20 per unit, Co=rs200per order, and h=20% of

    rs20=rs4/unt/year, we have
    EOQ= ((2*Co*D)/ H)1/2
    = ((2*200*50000)/4)1/2

    =2.236

    length of order cycle =EOQ/D = 2236/50000 =16 DAYS

    ii) no. of orders =6

    order quantity =50000/6= 8333units

    total relevant cost= ordering cost + holding cost =6*200+ 8333/2 *4=17866

    total relevant cost under EOQ= (2*Co*D*h)1/2

    =(2*200*50000*4)1/2

    % change in he total relevant cost =(17866-8944)/8944 *100= 99.75%

    iii) with new values Co=5000 & h= 15% of 20 =3,

    EOQ=((2*5000*50000)/3)1/2= 12910 units

    total relevant cost = (2*5000*50000*3)1/2= rs38730

    actual total relevant cost under policy in i) above = (50000/2236)*5000 +

    2236/2*0.15*20= Rs 115161

    loss= 115161-38730 = 76431

    iv) TC(12910)= 50000*20+ 50000/12910 * 0.15*20

    =RS. 1016750

    TC(20000)=50000*19.50+ 50000/20000 *5000 + 20000/2*0.15*1950

    =1016750
    TC(30000)=50000*19.25 + 500000/30000 *5000+30000/2*0.15*19.25

    = 1014146

    V) SET EQUAL TO x

    50000x + 50000/50000 * 5000 + 50000/2* 0.15x = 1014146

    53750x = 1009146

    x= 1009146/53750 = 18.77

    thus, a unit price offer of rupees 18.77 would be justifiable as an alternative to the

    proposal given in iv).

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