The Jambawan Ltd uses about 75,000 valves per year and usage is at 6,250 values per month. The cost of the valve is Rs. 1.50 per unit, when bought in quantities and the carrying cost is estimated to be 20% of average inventory investment on the annual basis. The cost to place an order and to process the delivery is Rs. 18.

It takes 45 days to receive delivery from the date of an order, and the safety stock of 3,250 valve is desired.

You are required to determine:

(a) the most suitable EOQ and

(b) the order point