Question

A manufacturing company needs 2500 units of a particular item every year. The company buys it at the rate of ₹ 30 per unit. The order processing cost for this item is estimated at ₹ 15 and the cost of carrying a item in stock comes to about ₹ 4 per year. The company can manufacture this item internally. In that case it saves 20% of the price of the product. However, it estimates a set-up cost of ₹ 250 per production run. The annual production rate would be 4800 units. However, the inventory holding costs remain unchanged.

i) Determine the EOQ and the optimal number of orders placed in a year.

ii) Determine the optimum production lot size and the average duration of the production run.

18 Feb 2025
Answer :
Word Count : 289
### Given Data: - Annual demand (\(D\)) = 2500 units - Cost per unit (\(C\)) = ₹30 - Ordering cost (\(S\)) = ₹15 - Holding cost per unit per year (\(H\)) = ₹4 - Internal manufacturing cost per unit = \( 30 - 20\% \times 30 = 30 _________ __________ ________ _______ _________ _________ _____ __________.
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