A company has the procurement pattern of five items irrespective of their level of

demand as given in the table 1:

Table 1

Item No. Annual Demand (Rs.) No. of orders per year Order Size (Rs.)

Reduce the inventory levels while keeping total number of orders per year the

To reduce inventory levels while keeping the total number of orders per year the same, we need to adjust the order size for each item while maintaining the total order frequency (number of orders per year) for all items. This can be achieved by redistributing the order size in a way that maintains the overall procurement pattern.

In this case, we'll redistribute the order sizes proportionally based on the ratio of each item's annual demand to the total annual demand. Here are the steps to achieve this:

Steps to Redistribute Order Sizes:

1. Calculate the total annual demand for all items.

Total Annual Demand=∑Annual Demand for each itemTotal Annual Demand=∑Annual Demand for each item

2. Calculate the proportion of each item's annual _______ _________ ____ ______ _______ _________ _______ ____ __________.
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