FAWCM – Alaknanda Lonare

Inventory Management

Q.1. Find out the economic ordering quantity (EOQ) from the following particulars.
Annual usage: 6000 units
Cost of material per unit Rs. 20
Cost of Placing and receiving one order: Rs.60
Annual carrying cost of one unit: 10% of inventory value.

Q.2. A firm’s inventory planning period is one year. Its inventory requirement for this period is 1,600
units. Assume that its acquisition costs Rs.50 per order. The carrying costs are expected to be Re. 1 per
unit per year.
The firm can procure inventories in various lots as follows:
a) 1,600 units b) 800 units c) 400 units d) 200 units e) 100 units
Which of these order quantities are economic order quantities?

Q.3. Calculate the ordering level of material “A” from the following particulars:
Minimum Limit: 1,000 units.
Maximum Limit: 5,000 units.
The daily requirement of material: 200 units.
The time required for fresh delivery: 10 days

Q.4. Calculate the minimum stock level, maximum stock level, re-ordering level and average stock level
from the following information:
(i) Minimum consumption = 100 units per day
(ii) Maximum consumption = 150 units per day
(iii) Normal consumption = 120 units per day
(iv) Re-order period = 10-15 days
(v) Re-order quantity = 1,500 units
(vi) Normal re-order period = 12 days

Q.5. A Company uses 1,50,000 valves per year and usage is fairly constant at 12,500 units per month.
The valve costs Rs 3.00 per unit when bought in quantities and the carrying cost is estimated to be 20% of
average inventory investment on an annual basis. The cost to place an order and process the delivery is Rs
36. It takes 45 days to receive delivery from the date of an order and a safety stock of 6,500 valves is
desired. Compute (a) Economic Ordering Quantity (b) Re-Order Point (c) No. of Orders in a year.

Q.6. Following data relates to ABC & company.

Calculate: (i) Re-order level (ii) Maximum level (iii) Minimum level (iv) Average Stock level

Annual Consumption: 18000 units

Re-order Quantity: 300 units
Re-order period: 6 to 8 days
Maximum usage: 80 units
Minimum usage: 20 units