1. RTC Limited uses chemical-X in one of its finished products. The chemical-X is purchased from a vendor outside India. RTC Limited purchases 36,000 ltr of chemical-X per year at the rate of 900 per Itr plus import duty @10% on such purchases. The chemical-X is used evenly throughout the year in the production process on a 360-day-per-year basis. The company incurs * 1,75,000 on one year agreement for material supply with the vendor and it estimates that * 35,000 will be incurred to place a single purchase order. The chemical-X is needed to be kept in a very carefully controlled temperature and humidity conditions. RTC Ltd. incurs 1.5% and 0.2676% of the value of inventory as storage cost and as insurance cost respectively. Delivery from the vendor generally takes 12 days, but it can take as much as 16 days. The days of delivery time and percentage of their occurrence are shown in the following tabulation: Delivery time (days) : 12 13 14 15 16 Percentage of occurrence : 70 10 10 5 5 Required: (1) Compute the economic order quantity (EOQ). (ii) Assume the company is willing to assume a 10% risk of being out of stock. What would be the safety stock? The re-order point? (iii) Assume 5% stock-out risk. What would be the total cost of ordering and carrying inventory for one year