customers.

One of its
of items for its
1. The KC Mech Ltd. carries a wide assortment Ordering cost per
order is
popular items has an annual demand of 8000 units. and
average inventory is 20% per year
found to be Rs. 12.5. The carrying Cost of quantity and make
the cost per unit is Re. 1.00. Determine the optimal economic
your recommendations. (Ans. 1000) per pleCe
An OIl engine manufacturer purchases lubricants at the rate of Rs. 42
Z.
these lubricants are 1800 per year. What
Trom a vendor. The reguirements of an order is
if the cost per placement of
Snouid be the ordering quantity per order,
rupee per year is 20 paisa. (Ans. 83)
Ks. 15 and inventory carrying charges per annual
purchases 9000 parts of a machine for its
J. A manufacturing company each part costs Rs. 20. The
requirements ordering for month usage at a time,
charges are 15% of the average
ordering cost per order is Rs. 15 and carrying
suggest a more econornical
inventory per year. You have been assigned to
offer and how much would
purchase policy for the company. What advice do you
should purchase 300 parts at a
It save the company per year? (Ans. Company
parts each month. The net
time interval of 1/30 year instead of ordering 750
saving of the company will be Rs. 405 per year)
demand of 15000 urits
4. For an item costing Rs.50 per unit, there is a constant
inveitory
per a.num. The estimated cost of placing an order is Rs.150 and the
cari ying cost is 24%. Find the Econornic Order Quantity (EOQ). (Ans. 612)
5. Ån enterprise requires 1000units per month. The ordering cost is estimated to be
Rs. 50 per order. In addition to Rs. 1, the carrying costs are 5% per unit of
average inventory per year. The purchase price is Rs. 20 per unit. Find the
economic lot size to be ordered and the total minimum cost. S Rs. 241550)
S. The KC Mech manufacturing company uses 12000 units of raw material
annually, which costs Rs. 1.25 per unit. Placing each order costs Rs.15 and the
carrying costs are 15% per year per unit of the average inventory. Find the
economic order quantity. 386
7. The KC Mech manufacturing company has determined from an analysis of its
accounting and production data for a part, that its cost to purchase is Rs. 36 per
order and Rs. 2 per part. Its inventory carrying charge is 18% of the average
inventory.The demand for this part is 10000 units per annum.
a) What should the economic order quantity be? 1415
b) What is the optimum number of days supply per optimumorder?dy
8. KC Mech Ltd. uses EOQ logic to determine the order quantity for its various
components and is planning its orders. The Annualconsumption is 80,000 units,
Cost to place one order is Rs. 1,200, Cost per unit is Rs. 50 and carrying cost is
6% of Unit cost. Find EOQ, No. of order per year, Ordering Cost and Carrying
Cost and Total Cost of Inventory. (Ans. 8000, 10 orders per year, ordering cost
Rs. 12000,carrying cost Rs. 12000, total inventory cost Rs. 24000)
 plans for its
Corporation is trying to decide between two alternate order
9 KC Mech demand for the
of the plan to be followed,
inventory of a certain item. Irrespective Under Plan 1st, KC Mech would use
to be 1,000 units annually.
item is expected
costs would be Rs. 40 per order. Inventory holding
a teletype for ordering; order
costs (carrying cost) would be Rs. 100
per unit per annum. Under Plan 2nd
order
Cost
Plon2 24oC
holding costs would be 20% and unit
costs would be Rs. 30 per order. And
is Rs. 480. Find out EOQ and Total
Inventory Cost then decide which Plan would
result in the iowest total inventory cost? (Ans. Plan 2) each year (A maximum
y30
part
10.A local TV repairs shop uses 36,000 units of a
20 to place and receive A) 1go0
consumption of 100 units per working day). It costs Rs.
cost Rs. 4 to carry one unit pe ) 8 c
an order. The shop orders in lots of 400 units. It
total annual carrying<) 26 00
year of inventory. Find (a) total annual ordering cost, (b) Quantity (e) total(d) 6U
Order
cost (c) total annual inventory cost (d) Economic using EOQ (g%e 2 4
inventory cost using EOQ inventory Policy () how much save G) 20
ordering point assuming the lead time is 3 days.
11.KC Mech Corporation can produce 12000 bearings per day. It received an
order ()3r
in a
of 80C0 bearings per day from a customer. The cost of holding a bearing
What
stock is Rs. 0.2 per month. Setup cost per production run is Rs. 500.
should be the frequency of production runs assuming 300 working days in a
year? (Ans. 6.8 days)
12. KC Mech Corporation purchases 9000 parts of a machine for its annual
requirements ordering for month usage at a time, each part costing Rs. 20. The
ordering cost for order is Rs. 15 and carrying charges are 15% of the average
inventory per year. What should be theoptimal order quantity? (Ans. 300)
13. In the classical economic order quantity (EOQ) model, let Q and C denote the
optimal order quantity and the corresponding minimum total annual cost (sum of
the inventory holding and ordering cost). if the order quantity is estimated
incorrectly as Q = 2Q then what would be the corresponding total annual cost C?
(Ans. 1.25 C)
14.A particular item has a demand of 9000 units per year. The cost of one
procurement is Rs. 108 and the holding cost per unit is Rs. 2.4 per year. The
replacement is instantaneous and no shortages are allowed. What is the
optimum number of orders per year? (Ans. 10orders/year)
15. Daily production capacity of a bearing manufacturing company KC Mech
corporation is 30000 bearings. The daily demand for the bearing is 15000. The
holding cost per year of keeping a bearing in the inventory is Rs. 20. The setup
cost for the production of a batch is Rs. 1800. What would be the economic batch
quantity in number of bearing assuming 300 working days in a year? (Ans.
40250)