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    Manasi Vichare
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    Sunil owns a battery shop and sells batteries for Rs. 5.25 each that normally cost Rs. 3.20 each to purchase. Batteries have an 18 month life. Sunil sells an average of 21 batteries per week. His annual inventory holding cost is 25% of the battery cost. The document calculates the economic order quantity (EOQ) for Sunil's business under different discount scenarios to determine the optimal order quantity that minimizes total costs.

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    Sunil owns a battery shop and sells batteries for Rs. 5.25 each that normally cost Rs. 3.20 each to purchase. Batteries have an 18 month life. Sunil sells an average of 21 batteries per week. His annual inventory holding cost is 25% of the battery cost. The document calculates the economic order quantity (EOQ) for Sunil's business under different discount scenarios to determine the optimal order quantity that minimizes total costs.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    12 views5 pages

    OR Final

    Uploaded by

    Manasi Vichare
    Sunil owns a battery shop and sells batteries for Rs. 5.25 each that normally cost Rs. 3.20 each to purchase. Batteries have an 18 month life. Sunil sells an average of 21 batteries per week. His annual inventory holding cost is 25% of the battery cost. The document calculates the economic order quantity (EOQ) for Sunil's business under different discount scenarios to determine the optimal order quantity that minimizes total costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 5

    Case:

    Sunil Eveready company carries


    the shop of selling the battery
    .The battery normally cost
    Rs.3.20 per cell & he sell it for
    5.25.The Eveready battery has life
    of 18 months .Sunil make average
    sales are 21 batterys per week
    .His annual inventory holding cost
    is 25%& its cost Sunil insure Rs20

    Solution :
    if every day offers a 7% discount on order
    of 400& more Batterys
    10% discount on order of 900& more
    batterys
    15% discount on order of 2000& more
    batterys
    Find out Sunils EOQ:
    Calculation :
    Demand :21*52 Weeks
    Annual Demand =1092

    EOQ at 7%Discount
    : Discounted cost = 7/100*3.20=0.24
    =total cost =2.96
    =25/100*2.96=0.744
    2 BD
    Q*

    2 * 20 *1092
    ---------0.744

    =242.30

    EOQ at 10% discount


    Discounted cost=10/100*320=0.32

    total cost=2.88
    =26/100*2.88=0.72
    2 BD
    Q*

    2 * 20 *1092
    0.72
    =246.31

    Total cost[for cost at 7% discount]


    = TFC+TVC
    /2
    =CD+bd/2+
    =2.96*1092+20(1092)/242.30+0.744(242.
    30)/2
    =3232.32+90.14+90.135
    =3412.60
    Total cost [for cost at 10% discount ]=
    =TFC+TVC
    =CD+bd/2+ /2
    =2.88*1092+20(1092)/246.31+0.72(246.3
    1)/2

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