Question

A dealer has to supply 15 computer to a retail customer every week. He maintain an inventory in which the maintenance cost is Rs. 100 per unit per year. The ordering cost is Rs. 350 per order. Find EOQ, the optimum re-scheduling time and the optimum average cost.

Answer 1

Given: R = 15/week ; and 

R = 15 × 52 per year. 

C₁ = Rs. 100 per unit/year. 

C₃ = Rs. 350 per order.

Q° = 73.89 units

Re-scheduling time t° = \(\frac{Q°}{R}\)

=\(\frac{73.89}{15\times52}\) =  0.0947 years.

i.e., 66 units should be ordered approximately every 1 month. 

The optimum average cost/minimum average cost :

= Rs. 7389.18 per year.