A company manufactures 5,000 units of a product per month. The cost of placing an order is
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A company manufactures 5,000 units of a product per month. The cost of placing an order is Rs. 100. The purchase price of the raw material is Rs. 10 per kg. The reorder period is 4 to 8 weeks. The consumption of raw materials varies from 100 kg to 450 kg per week; the average consumption being 275 kg. The carrying cost of inventory is 20% per annum. You are required to calculate reorder quantity, maximum level, minimum level and average level.
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