Ganges Pump Company Ltd. uses about 75,000 valves per year and the usage is fairly constant at 6,250 per month. The valve cost of ₹1.50 per unit when bought in large quantities, and the carrying cost is estimated to be 20 per cent of average inventory investment on an annual basis. The cost to place an order and process the delivery is ₹18.

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

You are required to determine: (i) The most economical order quantity and frequency of orders, (ii)

The order point, and (iii) The most economical order quantity if the valves cost ₹4.50 each instead of

₹1.50 each.