1.

A pharmaceutical firm for one of its key products estimates annual requirement of
raw material at 220 MT. The cost per MT is $ 4000. The ordering cost is $ 270 per
order. The interest rate is 12% per year. Compute the Economic Order Quantity.

2. You have the following details related to inventory. Using the details, find EOQ, Re-
order Level, Minimum and Maximum Level and Safety Level.

Quantity Required 3000 units

Ordering cost $ 300

Cost per unit $ 250

Cost of capital 8%

Average Consumption 10 units

Minimum Consumption 6 units

Maximum Consumption 13 units

Minimum Days 12 days

Maximum Days 20 days

Average Days 15 days