1. Your factory buys and uses a component for production at Rs. 10 per unit. Annual requirement is 2,000 units. Carrying cost is 10% p.a, ordering cost is Rs.40 per order. The purchase manger argues that as the ordering cost is very high, it is advantageous to place a single order for the entire requirement. He also says that if we order 2,000 units at a time we can get 3% discount from the supplier. Evaluate the proposal and make your recommendations.
2. A factory requires 1,500 units of an item per month. The costing of each unit is Rs27. The s. cost per order is Rs. 150 and inventory carrying charges is 20% p.a. Find out EOQ and ascertain the number of orders to be placed per order. Would you accept a 2% price discount on a minimum supply of 1,200 units?
3. Your factory buys and uses a component for production at Rs10 per piece. Annual requirement is 20,000 units. The carrying cost of inventory is 10% p.a and ordering cost is Rs40 per order. The purchase manager argues that as the ordering cost is very high, it is advantageous to place a single order for the entire annual requirements. He also says that if we order 20,000 units at a time we can get a 3% discount from the supplier. You are required to evaluate the proposal.