The quartely production of a company's product which has a steady market is 20,000 units. Each unit of a product requires 0.5 kg of raw material. The cost of placing one order for raw material is Rs. 100 and the inventory carrying cost is Rs. 2 per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw materials is maintained by the company. The company has been able to negotiate the following discount structure with the raw material supplier.

You are required to
(i) Calculate the re-order point taking 30 days in a month.
(ii) Prepare a statement showing the total cost of procurement and storage of raw material after considering the discount of the company elects to place one, two, four or six orders in the year.
(iii) State the number of orders which the company should place to minimize the costs after taking EOQ also into consideration.

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Order quantity kg. Upto 6,000 6,000 - 8,000 8,000 16,000 16,000 - 30,000 30,000 - 45,000 Discount Rs. Nil 400 2,000 3,200 4,000