1 A manufacturing company has an expected usage of 50000 units of certain

product during the next year. The cost of processing an order is Rs 20 and the
carrying cost per unit is Rs 0.50 for one year. Lead time on an order is five days
and the company will keep a reserve supply of two days usage. You are
required to calculate (a) the Economic Order Quantity and (b) the reorder point.
(Assume 250-day year.) calculate the total cost of this strategy

2 A firm’s requirement of materials is 3,000 units (price Rs 20 per unit) for 15

days. The ordering cost per order is Rs. 30 and the carrying cost is Rs 0.50.
calculate the EOQ and if the lead time is 2 days calculate the reorder point. Also
calculate the total cost

3 Requirement for the year 90,000 units. Carrying cost Re1 per unit. Ordering
cost is 50. calculate EOQ, reorder point if the order needs 5 days to execute.
assume 250 days a year

4 Annual demand for a product is 4800 units. ordering cost is 500 per unit.
Inventory carrying cost is 24% of the purchase price per unit. The price break
up is as below:

If the order cost is changed to 300 find the optimal size to order.

5 A firm’s requirement of materials is 3,000 units (price Rs 20 per unit) . The

ordering cost per order is Rs. 30 and the carrying cost is Rs 0.50. If the schedule
of discount given below is applicable to the firm, determine the most
economical order quantity.
Lot size price

1-499 20

500-699 18
700-999 16
1000-2499 15
2500 and above 14
6 A company is considering a selective inventory control using the following
data: 70% 25% 5%

Cost per
Item Units Unit (Rs.)
1 6000 4.00
2 61200 0.05
3 16800 2.10
4 3000 6.00
5 55800 0.20
6 22680 0.50
7 26640 0.65
8 14760 0.40
9 20520 0.40
10 90000 0.10
11 29940 0.30
12 24660 0.50