44.

(a) The following information relates to the Beta company:

Units required per annum = 30,000 Cost of placing an order = Rs 400 Carrying cost = Rs 600 per unit per annum.
Assuming that the demand for the product is uniformly distributed throughout the year, what is the EOQ?
(i) 200, (ii) 300, (iii) 400, (iv) 500, (v) 600.

(b) A company requires 10,000 units of an item, the demand for which is evenly distributed over the year. The set-up cost every time that a production run is made is Rs 80 while the cost of carrying a unit in inventory for a one-Year period amounts to 40 paise. Assuming that the item is to be produced at the lowest possible cost and that each run would be for the same number of units, how many production runs would be made?
(i) 3, (ii) 4, (iii) 5, (iv) 8, (v) 10.
(

c) A company desires to know the amount of safety stock that it should maintain for a certain product that would result in the lowest cost. Each stockout would cost Rs 80, and the carrying cost of each unit of safety stock will be Rs 1.20. If the product is to be ordered 5 times a year, which of the following will produce the lowest cost?
(i) a safety stock of20 units which is associated with a 50% probability of running out-of-stock during lead time.
(ii) a safety stock of 30 units which is associated with a 30% chance of running out-of-stock during an order period.
(iii) a safety stock of 40 units that is associated with a 10% probability of running out-of-stock during an order period.
(iv) a safety stock of 60 units that is associated with a 5% probability of running out-of-stock during an order period.
(

d) For a product X what safety stock amount will result in the lowest cost? You are provided with the following information:

The number of units of the safety stock that would result in the lowest total cost would be:
(i) 10, (ii) 20, (iii) 30, (iv) 40, (v) 50, (vi) 60.

Transcribed Image Text:

Stockout cost : Rs 80 per occurrence Carrying cost of safety stock Number of orders per annum Rs 2 per unit 5