ABC Ltd. uses 10,240 units of a component in a year. The purchase price per unit of the component is Rs. 10 and the carrying cost including interest is estimated at 20% of the average inventory investment on annual basis. The cost of placing an order and processing the delivery is Rs. 20. (a) Ascertain the economic order quantity and the number of orders each of the economic order quantity, to be placed for the component in a year. (b) Assuming that the average daily consumption of the above component is 20 units and that the normal lead time is 15 days, calculate the ordering level for the component, where safety stock is considered to be equal to 25 days' consumption. State why ordering level is fixed.