Stock Level 1.

From the following calculate: (i) Re-ordering Level and (ii) Minimum Level (a) Minimum usage 100 units per week (b) Normal usage 200 units per week (c) Maximum usage 300 units per week (d) Re-order period 4 to 6 weeks [Ans: (i) 1,800 units (ii) 800 units] 2. Calculate : (i) Re-order Level (ii) Re-order Quantity (iii) Average Stock Level Normal usage Minimum usage Maximum usage Minimum level Maximum level Re-order period 3. (a) (b) (c) (d) Required: Re-order Level 100units per day 60 units per day 130 units per day 1,400 units 7,800 units 20 to 30 days [(i) 3,900 units, (ii) 5,100 units (iii) 4,600 units] Following information is available to you. Minimum stock 1,000 units Maximum stock 2,000 units Daily consumption of material 50 units Time required for receiving the materials 15 days

[Ans: 1,750 units] 4. Calculate Re-ordering Level, Minimum Level and Maximum Level from the following data: Re-order quantity 1,500 units Re-order period 4 to 6 weeks Maximum consumption 400 units per week Normal consumption 300 untis per week Minimum consumption 250 units per week Ans: Ordering Level 2,400 units; Minimum Level 900 units; Maximum Level 2,900 units; 5. The following information is available in respect of component DP 5: Maximum stock level 8,400 units Budgeted consumption- maximum 1,500 units per month Budgeted consumption- minimum 800 units per month Estimated delivery period - maximum 4 months minimum 2 months You are required to calculate:

(i) (ii)

Re-order level Re-order Quantity

[Ans: (i) 6,000 (ii) 4,000] 6. From the following datea for the last twelve months, compute the Average Stock Level for a component. Maximum usage in a month 300 units Minimum usage in a month 200 units Average usage in a month 225 units Re-ordering quantity 750 units Time lag procurement of material: Maximum 6 months Minimum 2 months Hints: Since you are given EOQ, you are suggested to use the following formula for the calculation of Average Stock Level. Average Stock Level = Minimum Stock Level + of EOQ [Ans: 1,275 units] 7. Find out Minimum Stock Level, Maximum Stock Level and Ordering Level from the following particulars. (a) Minimum consumption 100 units per day (b) Maximum consumption 175 units per day (c) Normal consumption 125 units per day (d) Re-order quantity 1,500 units (e) Minimum period for receiving goods 7 days (f) Maximum period for receiving goods 15 days (g) Normal period for receiving goods 10 days [Ans: Ordering Level 2625 units; Minimum Stock Level 1375 units; Maximum Stock Level 3425 units] 8. Two components A and B are used follows. Normal usage per week 50 units Minimum usage 25 units week each Maximum usage 75 units per week each Re-order quantity A: 300 units B: 500 units Re-order period A: 4 to 6 weeks B: 2 to 4 weeks Required for both components: (a) Re-order level (b) Minimum Level (c) Maximum Level (d) Average Stock Level [Ans: Re-order level A = 450 units; B= 300 units Minimum Level A = 200 units; B = 150 units Maximum Level A = 650units; B = 750 units Average Stock Level A=425 units; B= 450 units 9. The following information are supplied for you: Maximum Stock Level = 11,400 units per day Minimum usage = 300 units Minimum re order period = 10 days Re-order quantity = 5,400 units

Required: Re-order level [Ans: 9,000 units]

10. The following information are relating to a business Maximum stock level 25,500 units Delivery period 10 to 15 weeks Consumption per week 1,200 to 2,000 units Required: Re-order quantity [EOQ] [Ans: 7,500 units] 11. You are given the following information Maximum lead time = 60 days Normal lead time = 45 days Maximum usage = 7,500 kg Normal usage = 6,000 kg EOQ = 60,000 kg. Required: Maximum Stock Level [Ans: Rs. 3, 75,000] 12.From the following Calculate: (a) Re-order level (b) Minimum stock level (c) Average Stock Level Economic order quantity 5,000 units Consumption 250 to 400 units Re-order period 6 to 12 days Normal lead time 10 days Normal consumption 300 units [Hints: (i) Normal re-order period and consumption are given, you don't need to determine them. (ii) In this case, it is desirable to use the following formula to calculate average stock level, by using given information Average stock level = Minimum stock level + of EOQ] [Ans: ROL = 4,800 units; Minimum stock level = 1,800 units; Average stock level = 4,300 ] 13. Calculate the average stock level from the following information. Minimum stock level = 800 units Re-order quantity = 2,400 units] [Ans: 2000 units] 14. From the following information, calculate the re-order level. Annual consumption = 3,600 units Working days = 360 Minimum stock level = 240 units Lead time = 6 days [Ans: 300 units]

15. Calculate the danger level from the following. Maximum emergency period = 40 days Consumption = 200 to 400 units [Ans: 12,000 units] Economic Order Quantity Calculate Economic Order Quantity (EOQ) from the following. Annual consumption 6,000 units Cost of ordering Rs. 60 Carrying costs Rs. 2 [Ans: 600 units] 2. From the following particulars, calculate the Economic Order Quantity (EOQ). Annual requirements: 1,600 units Cost of materials per units: Rs.40 Cost of placing and receiving one order: Rs. 50 Annual carrying cost for inventory value 10% [Ans: 200 units] 3. Calculate EOQ from the following. (a) Consumption during the year = 600 units (b) Ordering cost Rs. 12 per order (c) Carrying cost 20% (d) Price per unit Rs. 20 [Ans: 60 units] 4. A manufacturer buys certain equipment form suppliers at Rs. 30 per unit. Total annual needs are 800 units. The following further data are available: Annual return on investments 10% Rent, insurance, taces per unit per year Re. 1 Cost of placing an order Rs. 100 Required: EOQ [Ans: 200 units] 5.Given the annual consumption of a material is 1,800 units; ordering costs are Rs. 2 per order, price per unit of material is 32 paisa and storage costs are 25% per annum of stock value. Required: The Economic Order Quantity (EOQ). [Ans: 300 Units] 6. From the following data, calculate: (i)EOQ (ii)Number of orders Order costs Rs. 300 per order Holding costs 15% of cost Annual consumption 10,000 units Cost per unit Rs. 10 [Ans: EOQ 2,000; No. of orders 5] 7.A Company uses 10,000 units per annum of item costing Rs. 5 each. The cost of processing the order is Rs. 100 and stock holding cost amount to 20% per year of the value of inventory. 1.

How much the company should buy at a time ( in a single order) to minimize the inventory costs? [Ans: EOQ 1,414 units] 8. From the figures given below, calculate Economic Order Quantity (EOQ) , Number of order and Total cost at EOQ. Total consumption of material per year 10,000 kgs Buying cost per order Rs. 50 Unit cost of material Rs. 2 per kg Carrying and storage cost 8% on average inventory. [Ans; EOQ 2,500; 4 orders per year; Total cost EOQ Rs. 400] 9. A factory required 1,500 units of an item per month, each costing Rs. 27. The cost per order is Rs. 150 and the inventory carrying charges work out to 20% of the average inventory. Required: a. Economic order quantity b. Number of orders per year c. Total cost at EOQ [Ans: EOQ 1,000 units; No. of orders 18; Total cost at EOQ Rs. 400] 10. Following data is given to you. a.Cost of ordering Raw materials Rs. 1,000 per order Packing material Rs. 5,000 per order b.Cost of holding inventory Raw Materials Re. 1 per unit p.m. - Packing materials 5 paisa per unit p.m. c. Production rate 2,00,000 units per month Find out EOQ for (i) Raw material (ii) Packing materials [Ans: (i) 2,00,000 units; (ii) 2,00,000 units] 11. Calculate the Economic Order Quantity Annual requirement of materials = 80,000 units Ordering cost per order = Rs. 100 Carrying cost per unit = 16% [Ans: Rs. 2,500] (Hint: If the unit price is not given then it can be assumed as Re. 1 or carrying cost will be as Rs. 16/100 i.e. Rs. 0.16) 12. Annual requirement Rs. 10,000 Ordering cost Rs. 50 Carrying cost Rs. 0.16 Required : EOQ in value (RS.) [Ans: Rs. 2,500] (Hint: If annual requirement is given in monetary value instead of units, the calculated EOQ is expressed in value) 13. The carrying cost per unit from the following. 500 units =

14. Your factory buys and uses a component for production at Rs. 10 per piece. Annual requirement is 2,000 numbers. Carrying cost of inventory is 10% p.a. and the ordering cost is Rs. 40 per order. The purchase manager agrees that as the ordering cost is very high, it is advantageous to place a single order for the entire annual requirement. He also says that if we order 2,000 units at time, we get a 3% discount from the supplier. Determine the Economic Order Quantity. [Ans. EOQ 400 units] 15. The following relations to inventory costs are found for a company. (i) Order must be placed in multiples of 100 units (ii) Requirement for the year is 3,00,000 units (iii) The purchase price per unit is Rs. 3 (iv) Carrying cost is Rs. 25% of the purchase price of goods (v) Cost per order placed is Rs. 20 (vi) Desired safety stock is 10,000 units, this amount is on hand initially (vii) 3 days are required for delivery Calculate: (a) EOQ (b) How many orders should the company place each year? (c) At what inventory level should an order be placed? [Ans: EOQ 4,000 units; NO. of orders 75; Re-order Level 13,000 units] 16. The annual requirement of an item is 12,000 units each costing Rs. 6. Every order costs Rs. 200 at release and inventory carrying charges are 20% of the average inventory per annum. Find out: (i) Economic order quantity and corresponding total inventory cost (including item costs) (ii) Where the item should be purchased in lots of 6,000 units at a time, if the price per units is reduced by 5%. [Ans: (i) EOQ 200 units, Total inventory cost Rs. 14,600 (iii) Total inventory cost Rs. 24,057 if purchased in lots of 6,000 units] 17. The following information in an inventory problem is available. Annual demand 2,400 units Units price (Rs.) 2.40 Ordering cost (Rs.) 4 Storage cost (Rs.) 2% per year Inventory rate 10% p.a. Calculate (i) EOQ (ii) Total annual inventory cost (iii) How much does the total inventory cost vary if the unit price is changed to Rs. 5 [Ans: (i) 258 units (ii) Rs. 5,837.15 (iii) Difference is Rs. 12,109.70 Rs. 5,837.15 = Rs. 6,272.55] 18. The following details are available in respect of a firm. Inventory requirement per year =6,000 units Cost per unit (other than carrying and ordering cost) =Rs. 5 Carrying cost per item for one year = Re. 1

Cost of placing each order = Rs. 60 Alternative order sizes (units) = Rs. 60 Required: Economic Order Quantity under Trial & Error Approach. [Ans. 1,000 units]