Question
Hekmatia Dawa Khana uses Neem oil for one of Its Ayurbadiya drug. It requires 30 thousand litres of Neem oil annually. The oil must be
Hekmatia Dawa Khana uses Neem oil for one of Its Ayurbadiya drug. It requires 30 thousand litres of Neem oil annually. The oil must be purchased in multiples of 250 litres. ordering costs are Tk.550 per order. Annual carrying costs are 25 per cent of the purchase price of Tk.8 per litre. Hekmatia maintains a safety stock of 25,000 litres. The delivery time is 3 weeks (1 year = 52 weeks)
i. How many litres of the inventory should Hekmatia order to minimise its total cost? ii. At when inventory level should an order be placed to prevent having to draw on the safety stock? iii. What is the inventory's average, maximum, and minimum value?
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