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Unit 4 Problems

1. A production department requires 3600 kg of raw materials per year at Rs.10 per kg. Ordering costs Rs.36 and inventory carrying costs are 25% of investment. The production manager wants to determine an optimal ordering policy. 2. A company demands 8000 meters of copper cable per week. Replenishment costs Rs.1050 for administration and Rs.1650 for delivery, while holding costs are 25% of value held annually. The optimal inventory policy maximizes profit without shortages. 3. The optimal order quantity (EOQ) is to be determined for data including annual usage of 1000 pieces, ordering cost of Rs.6, inventory holding cost of 20% of average inventory, and

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1K views5 pages

Unit 4 Problems

1. A production department requires 3600 kg of raw materials per year at Rs.10 per kg. Ordering costs Rs.36 and inventory carrying costs are 25% of investment. The production manager wants to determine an optimal ordering policy. 2. A company demands 8000 meters of copper cable per week. Replenishment costs Rs.1050 for administration and Rs.1650 for delivery, while holding costs are 25% of value held annually. The optimal inventory policy maximizes profit without shortages. 3. The optimal order quantity (EOQ) is to be determined for data including annual usage of 1000 pieces, ordering cost of Rs.6, inventory holding cost of 20% of average inventory, and

Uploaded by

19R21A05C0 19 - CSE B
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1.

The production department of a company requires 3600 kg of raw material for


manufacturing a particular item per year. It has been estimated that the cost of placing an
order is Rs.36 and the cost of carrying inventory is 25 percent of the investment in the
inventories. The price is Rs.10 per kg. purchaser manager wishes to determine an
ordering policy for raw materials. (Example 14.1 in page no: 485)

2. A company that operates for 50 weeks in a year is concerned about its stocks of copper
cable. This costs RS 240 a meter and there is a demand for 8000 meters a week. Each
replenishment costs Rs 1050 for administration and Rs 1650 for delivery, while holding
costs are estimated at 25 % of the value held a year. Assuming no shortages are allowed,
what is the optimal inventory policy for the company? (Example 14.2 in page no: 486)
3. Find the EOQ for the following data :
Annual usage = 1000 pieces
Expediting cost Rs.4 per order
Cost per piece= Rs250
Inventory holding cost = 20% of average inventory
Ordering cost= Rs6 per order
Material holding cost =Re1Per piece
4. The demand for fresh cream cakes is normally distributed with a mean daily demand of
60 and a standard deviation of 12.5.. Each cake is estimated to cost 60pto produce and is
sold for £1.05each. Any cakes not sold on the day it is produced has a salvage value of
25p. How many cakes should be produced to maximize the expected daily profit?
5. A contractor has to supply 10,000 bearings per day to an automobile manufacturer. He
finds that when he starts production run, he can produce 25,000 bearings per day. The
cost of holding a bearing in stock for a year is Rs.2 and the set-up cost of a production run
is Rs.180. How frequently should production run be made? (Example 14.5 in page no:
490)

7 An aircraft company uses rivets at an approximate customer rate of 2,500kg per


year. Each unit cost Rs 30 per kg and the company personnel estimate that it costs
Rs 130 to place an order, and that the carrying cost of inventory is 10% per year
how frequently should orders for rivets be placed ? also determine the optimum
size of each order . (self practice problem 4 in page no: 492)
8 The average annual consumption of a material is Rs.18,250 units at a price of
Rs.36.50 per unit. The storage cost is 20% on an average inventory & cost of
placing an order is Rs.50. How much quantity is to be purchased at a time?

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