Answer to Question #350420 in Management for gulnigor

Question

2. The annual demand for an item is 16,000 units. The units cost is $24 and inventory carrying charges is 20% p.a. If the cost of one procurement is $1200, determine:

(a) E.O.Q

(b) No. of orders per year

(c) Time between two consecutive orders.

3. RIL Industries Ltd. are the manufacturers of chemical products. The following are the details of their operation during the year 2021.

Average monthly market demand 10,000 units.

Normal usage 600 units per month.

Ordering Cost is $ 1000 per order.

Inventory carrying cost 24% per annum.

Cost of chemical products $ 850

Compute:

(a) EOQ.

(b) If the supplier is willing to supply quantity to supply quarterly 2000 units at a discount of 6% is it accepting?