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Assignment-04 Inventory Control Models: DSC 3346 Advanced Operations Research

This document discusses inventory control models and calculations for determining optimal order quantities. It includes examples of calculating economic order quantity (EOQ) using different methods, as well as economic batch quantity, cycle time, maximum inventory levels, shortages, and applying quantity discounts. The document contains 8 sections with examples of applying formulas to determine values like EOQ, number of orders per year, cycle time, and assessing quantity discounts for inventory planning.

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Supun jayathunge
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43 views3 pages

Assignment-04 Inventory Control Models: DSC 3346 Advanced Operations Research

This document discusses inventory control models and calculations for determining optimal order quantities. It includes examples of calculating economic order quantity (EOQ) using different methods, as well as economic batch quantity, cycle time, maximum inventory levels, shortages, and applying quantity discounts. The document contains 8 sections with examples of applying formulas to determine values like EOQ, number of orders per year, cycle time, and assessing quantity discounts for inventory planning.

Uploaded by

Supun jayathunge
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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DSC 3346 Advanced Operations Research

Assignment-04

Inventory Control Models

1. The annual inventory requirement of Ajith and company Pvt. Ltd is 2400
units. The ordering cost is Rs. 50 per order. The carrying cost is Rs. 1 per
order. The unit price is Rs. 60. At least 200 units must be ordered at a time.

i. Calculate Economic Order Quantity (EOQ) by using graphical


method.
ii. Calculate Economic Order Quantity (EOQ) by using formula method.
iii. Calculate Economic Order Quantity (EOQ) by using differential
calculus method.
iv. Calculate the optimal order quantity per year.
v. If the working days for a year is 200, find the cycle time.\

2. Shiromi industrial products company needs 5400 units of equipment for one
year. The ordering cost is Rs. 250. The holding cost is Rs. 30 per year. Based
on the above information,

i. Calculate the EOQ.


ii. Find the number of orders per year.
iii. What is the time between two successful orders (the cycle time)?

3. Sumudu Company’s annual raw material requirement is 1600 units. The


holding cost is 40% of the cost of a unit of raw material. The purchasing cost
of a unit raw material is Rs. 400 and the ordering cost is Rs. 500 per order. The
raw material supplier has recently decided to offer a 10% discount to the
company if it purchases more than 500 units of raw material per year.
According to above information,

i. Calculate the EOQ. Find the total cost per year relevant to it.
ii. Check whether the purchasing manager should be concerned about the
discounts offered by the supplier.

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DSC 3346 Advanced Operations Research

4. Nimal and company Pvt Ltd needs 9000 units of equipment for one year. The
ordering cost is Rs. 100. The holding cost is Rs. 2.40 per year. Based on the
above information,

iv. Calculate the EOQ.


v. Find the number of orders per year.
vi. What is the time between two successful orders (the cycle time)?

Manufacturing Model without Shortages

5. A car manufacturing company manufactures a certain type of car device in


the factory. This device is used for final assembly in car manufacturing. The
demand rate(r) for this device is 14000 units per year, the production rate is
35000 units per year, the ordering cost is Rs, 500. The holding cost is Rs. 15
per unit per year. According to above information, Find
i. Economic Batch Quantity (EBQ)
ii. Cycle time
iii. Number of set-ups per year

EOQ Model (Purchase model) with Shortages

6. The annual demand for a device is 7200 units. The carrying cost is Rs. 500
per unit per year. The ordering cost is Rs. 1500. The shortage Rs. 2000 per
unit per year.
i. Find the optimal value of Economic order quantity.
ii. Calculate the Maximum Inventory, Maximum shortage quantity,
Cycle time (t), period of positive stock (t1) and period of shortage (t2).

Manufacturing Model without Shortages

7. The annual demand for a device is 6000 units. The monthly production rate is
1000 units. The carrying cost is Rs.50 per unit per year. The ordering cost is
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DSC 3346 Advanced Operations Research

Rs. 2000. The stock out cost is Rs. 1000 per unit per year. Calculate the
following from the above information.

i. EBQ (Economic Batch Quantity)


ii. Maximum stock out
iii. Maximum inventory
iv. All t*, t*1, t*2, t*3, t*4

8. Nimesha and company Ltd. Are engaged in the sale of pen drives. It’s cost
per order is Rs. 2500 and it’s carrying cost is 12% per unit per year. The
company has a demand for 22,000 units per year. The purchase price per
sensor drive is Rs. 2850. Quantity discount schedule as follows.

Quantity discount schedule

Discount Number Discount Quantity Discount (%)


1 0-3500 0
2 3501-4500 2
3 4501-and over 4

Based on the above information calculate,


i. Optimal order size.
ii. Total orders required for a year.

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