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Inventory Numericals

This document discusses inventory valuation and economic order quantity (EOQ) calculations for several scenarios: 1. For a firm requiring 1600 units annually, with an acquisition cost of Rs. 50 per order and carrying cost of Rs. 1 per unit annually, the economic order quantity that minimizes total costs is 400 units. 2. For a company requiring 90,000 units annually, with a unit cost of Rs. 3, order cost of Rs. 300, and carrying cost of Rs. 6 per unit annually, the economic order quantity is 4500 units. The company should order 6000+ units to receive a 3% discount. 3. Calculating the savings for a company currently ordering 1200 units (a six

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233 views2 pages

Inventory Numericals

This document discusses inventory valuation and economic order quantity (EOQ) calculations for several scenarios: 1. For a firm requiring 1600 units annually, with an acquisition cost of Rs. 50 per order and carrying cost of Rs. 1 per unit annually, the economic order quantity that minimizes total costs is 400 units. 2. For a company requiring 90,000 units annually, with a unit cost of Rs. 3, order cost of Rs. 300, and carrying cost of Rs. 6 per unit annually, the economic order quantity is 4500 units. The company should order 6000+ units to receive a 3% discount. 3. Calculating the savings for a company currently ordering 1200 units (a six

Uploaded by

sushma
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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Inventory Valuation:

1. A firm’s inventory planning period is one year. Its inventory requirement


for this period is 1600 units. Assume that its acquisition costs are Rs 50
per order. The carrying cost per unit is expected to be Re I per unit per
year for an item.
The firm can procure inventories in various lots as follows:
a. 1600 units
b. 800 units
c. 400 units
d. 200 units
e. 100 units.
Which of these order quantities is an economic order quantity

2. Economic Enterprises requires 90,000 units of certain item annually. The


cost per unit is Rs 3. The cost per purchase order is Rs 300 and the
inventory carrying cost is Rs 6 per unit per year.
a. What is EOQ?
b. What should the firm do if the suppliers offers discount as detailed
below:
Order Quantity Discount
4500-5999 2 percent
6000 and above. 3 percent

3. The Peekay Company has been buying a given order in a lot size of 1200
units which is a six month supply, the cost per unit is Rs 12, order cost is
Rs 8 per order and carrying cost is 25 percent. You are required to
calculate savings per year by buying in EOQ.

4. Two components, A and B are used as follows:


Normal usage 50 units per week each Minimum usage 25 units per week
each
Maximum usage 75 units per week each
Re order quantity
A: 300 units
B: 500 units
Reorder period
A: 4 to 6 weeks
B: 2 to 4 weeks
Calculated (a) Re-order level (b) Minimum level (c) Maximum level (d)
Average stock level

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