Q1 ) A manufacturing company required 18000 units per year ordering cost 240/order ,holding cost 25% .
purchase price per units is Rs. 90 calculate i) EOQ ,ii) Optimum no. of orders,iii) Total cost.
Solution:-
Given data
Co = 240 / Order
Ch= 25% of Purchase price 22.5 Rs.
D= 18000 Units
Purchase Price= 90 Rs.
√(𝟐∗𝑫∗𝑪_𝟎 )/𝑪_𝒉
i)
Q=
Q= 620 units
ii) Order size
Order size =(Annual Demand/Q)
29.05 30 Order
iii) Total Cost
Total Material Cost=( Total unit price + Total Ordering Cost+ Total Holding Cost)
= ((18000*90)+(240*30)+(620/2*22.5))
= 1634171.4 Rs.
Therefore Total cost including material cost is 1634171 Rs.
Myakal S. B. Roll No:- B-65
Q.2) An item is produced at the rate of 128 units per day . The annual demand is 6400 units .
The set-up cost for production run is Rs 24 and Inventory carrying cost is Rs 3 per unit
year. These are 250 working days for production each year. Develop for inventory
policy for this item . (Shivaji, Production , 95) , ( Amravati , Mechanical , 94 )
𝑐_ℎ = Rs.24 per set-up
Solution : Given :- p = 128 units per day . D= Annual demand = 6400 units
𝑐_0 = Rs.24 per set- ∴ d= 6400/250 = 25.6
up ,
(As Holding cost/year is given , taken demand D= 6400 units)
√((2∗6400∗24)/3(1−25.6/128) )
i) Economic√((2∗𝐷𝐶_0)/C
Lot Size h(1−𝑑/𝑃) )
= 358 units
= 2.80 𝐃𝐚
ii) Time Required to Produce One batch = ( Economic Lot Size/rate of Production)
𝐲𝐬
14.0 𝐃𝐚
iii) Time cycle (time required to consume one Batch) = (Economic lot size / rate of demand )
𝐲𝐬
=
√(2∗𝐷∗𝐶_0∗(1−𝑑/𝑃) )
iv) Total Cost = = 175.27 Rs.
Model 4: -
Q 18. 6 Find the optimum order quntity for the following :
Annual demand = 3600 units,
Ordering cost= Rs. 50,
Cost of storage= 20% of unit cost
0≤𝑄_1≤100
Price break : Quntity Unit cost (Rs.)
100≤𝑄_2
20
18 (Shivaji, Production)
𝑄_𝑜=𝑅𝑠. 50.
Solution :Here, D= 3600 units,
𝐶_ℎ=20% 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡
i) For the range 0≤𝑄_1≤100, 𝐶_ℎ=20% 𝑜𝑓 20=𝑅𝑠. 4
𝑄_1=√((2𝐷𝐶_𝑜)/
𝐶_ℎ )=√((2∗3600∗50)/4)=
EOQ = 300 units
For the range100≤𝑄_2, 𝐶_ℎ=20% 𝑜𝑓 18=𝑅𝑠. 3.6
𝑄_2=√((2𝐷𝐶_𝑜)/
ii)
𝐶_ℎ
EOQ= )=√((2∗3600∗50)/3.6)= 316 units
0≤𝑄_1≤100
Quntity EOQ(units)
100≤𝑄_2
300
316
𝑄_2= 100 and EOQ =
As EOQ = 316 units satisfies condition of quntity take EOQ = 316 units.
Here we will calculate total inventory cost (including material cost) for 316
(𝐷×𝐶_𝑝 )+(𝐷/𝑄×𝐶_𝑜 )+(𝑄/2×𝐶_ℎ )
Total inventory cost (for Q = 100 units) =
=(3600×18)+(3600/100×50)+(100/2×3.6)
= 𝑅𝑠.66780
= 64800+1800+180
(3600×18)+(3600/316×50)+(316/2×3.6)
Total inventory cost (for Q = 316 units) =
=𝑅𝑠.65965.42
= 64800+596.62+568.8
Comment: Total inventory cost for 316 units is less than total inventory cost for 100 units.
Therefore give order of 316 units.
units.
Q.18.11) Annual Demand of an item is 10000 units. Cost per unit is Rs. 100. The supplier has agreed to provide a discount of 5
material per unit per year. Cost of ordering is Rs. 50 per order. Find eco
Solution :
Given : D = Annual demand = 10000 units, Cost per unit = Cp = Rs.
Ordering Cost = Co =Rs. 50 Holding cost = Ch = 20% of 100 = Rs.
Case 1: When no Discount is offered
√(2𝐷𝐶 √((2∗1000
EOQ = Q𝑜/𝐶ℎ)
= = 0∗50)/20) 224 units
=
As this is an example of discount offer, it is necessary tp calculate total cost including material cost
Total cost (including material cost) = ( D x C p ) + ( x Cp ) 𝐷/𝑄
= Rs. 1004472.143
Case 2: When discount of 5% is offered
New purchase price = Cp = Rs. 95 /unit
New holding cost = Ch = 20% of Rs. 95 = Rs. 19 /unit
√(2𝐷𝐶 √((2∗1000
EOQ = Q𝑜/𝐶ℎ)
= = 0∗50)/19) 230 units
=
However we can't take this quantity as ordering quantity because discount is available on quantity exceeding
So we will calculate total cost (including material cost) for 250 quantity.
□(64&𝐷/𝑄) x Ch ) □(
Total cost = (D x Cp)+( x Co )+( 64
&
𝑄/
2)
= Rs. 954375
Quantity Total cost
EOQ = 224 Rs. 1004472.143
Q= 250 Rs. 954375
d to provide a discount of 5% if the order exceeds 250 units. Cost of holding inventory is 20% of cost of
s Rs. 50 per order. Find economic order quantity.
100
= 20% of 100 = Rs. 20 / unit
uding material cost
able on quantity exceeding 250 units