SHRI RAMDEOBBA COLLEGE OF ENGINEERING

AND MANAGEMENT, NAGPUR

Subject- Production Planning and Control (PPC) Assignment

Course Code- INT352
Semester- V
Session- 2020-21

Guided by- Prof. M.R.Jain

Name-Prajwal.P.Rahangdale
Roll No.- 102
Branch-Industrial
Inventory: Inventory is a detailed list of all materials, their specifications and
standard number or quality.

Inventory Control system: Inventory control is a process for managing and

locating objects or materials.
It is a scientific system which indicates What to Order, When to Order, and How
much to Stock so that the purchasing costs and storing costs are kept as low as
possible.

Replenishment systems
•Notations and formulas:
Annual Demand = D
Ordering costs per unit = C0
Holding cost per unit per year = Ch
C h = Cp x I
Where; Cp = cost per piece
I = Interest rate per piece
Economic Order Quantity (EOQ) = EOQ refers to the optimum level of inventory at
which the total cost of inventory comprising ordering cost and holding cost is
minimum maintaining the forecasted demand adequacy.
EOQ = √ [(2 x D x C0) / (Ch x (1 - d/p))]
Where; d = demand rate per day
p = production rate per day
Minimum Inventory cost = √ [2 x D x C0 x Ch x (1 - (d/p))]
•Numerical
Que: A manufacturer has to supply 50 units of batteries per day. He can produce
80 units of batteries per day. The cost of holding a unit of battery per year is
₹100 and the setup cost of production is ₹800 per unit.
Calculate EOQ and Minimum Inventory cost.
Solution:
Given data;
demand rate per day (d) =50
Annual Demand(D) = 50 x 365
= 18250
production rate per day(p) = 80
Holding cost per unit per year (Ch) = 100
C0 = 800

1)EOQ = √ [(2 x D x C0) / (Ch x (1 - d/p))]

= √ [(2 x 18250 x 800) / (100(1 – 50/80))]
= 882
2)Minimum Inventory cost = √ [2 x D x C0 x Ch x (1 - (d/p))]
= √ [2 x 18250 x 800 x 100 x (1 - (50/80))]
= 33091₹