A = 260000 kg Production quantity = 50000 kg per production run

s = 2000 Rs. Safety stock = 20000 kg

Price = 150 Rs./ kg No. of working days per year = n =
c = 15 % of Rs. 150 = 22.5 Rs./unit/year
a) The number of production batches during a year = A / Prodn. quantity =
b) Max. inventory = Prodn. quantity per batch + Safety stock = 70000 Min. inventory = Safety stock =
Average inventory level (including the safety stock) = (Max. inventory + Min. inventory) / 2 =
c) Inventory turnover = A / Average inventory = 5.777778 times per year
d) Average days of supply in inventory (known as cover-time) = (Average inventory / A) x No. of working days per year =
e) Reorder point = Rate of consumption of inventory (units per day) x Lead time + Safety stock
= (A / No. of working days per annum) x Lead time + Safety stock = 31304.35
f) Total inventory cost = Total set-up cost + Total c.c
Total s.c. = No. of prodn. lots during the year x s = Rs. 10400
Total c.c. = Average inventory x c = Rs. 1012500
Rs. 1022900 Total inventory cost = Total o.c. + Total c.c
Rs. 4447.391 Total inventory cost per working day = Total inventory cost/ No. of working days
g) Pure EOQ = (2As / c) = 6798.693
h) Economic Prodn. Lot Size Q = {2Asp/(p - d)c} = 7377.363 units per production run
New number of prodn. batches per year = A / Economic prodn. lot size = 35.24295
Average inventory level = Q(p - d) / 2p + New level of safety stock = 13132.71
Cover time = 11.61739
For Economic Prodn. Lot Size, Total inventory cost = Total s.c. + Total c.c + c.c. of safety stock
Total s.c. = As / Q = 70485.89
Total c.c. = Total s.c. = 70485.89
c.c. of safety stock = New level of safety stock x c = 225000
Rs. 365971.8 Total inventory cost
Rs. 1591.182 Total inventory cost per working day = Total inventory cost/ No. of working days
kg per production run
Lead time = 10 days
230
5.2
Min. inventory = Safety stock = 20000
45000 units
(Average inventory / A) x No. of working days per year = 39.80769 working days
units
Total inventory cost = Total o.c. + Total c.c
Total inventory cost per working day = Total inventory cost/ No. of working days
Production rate p = 7500 kg per working day
Demand rate d = A/n = 1130.435 kg per working day
(p - d) = 6369.565 kg per working day
New level of safety stock = 10000 kg
Total inventory cost per working day = Total inventory cost/ No. of working days