A question might combine the EOQ model and reorder level or safety inventory (butter stock). Example: A company orders 50,000 units of an item when the inventory level falls to 100,000 units. Annual consumption of the item is 1,800,000 units per year. The holding cost per unit is Rs.1.50 per unit per year and the cost of making an order for delivery of the item is Rs.375 per order. The supply lead time is 2 weeks (assume a 50-week year and constant weekly demand for the item). Required Calculate the cost of the current ordering policy and calculate how much annual savings could be obtained using the EOQ model if the existing policy on buffer stack was retained