Indus ffial

O rg

antzation and Manag ement

3'

Module-IV-136-

ndus trial

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anizatit

A manufacturer has to supply his customers 36O0 units of his product per yearInventory carrying cost amounts to Rs.l.2 per unit per annum. brderingcost per run is Rs.go. Find a)EoO b) Optimum number of oiders per annum c) iaireimum annual average inventory cost d) opumum period of supply per optimum order. Soluhon: Annual demand, A = 360o, Inventory carrying cost, c = I.2/unit/annura Ordering cost, P= 80/order
Giuen,

5.

Indian telecor of Rs.l2,5OO cost is Rs.48 Determine EC

Solutircn:

2x3600x80 = 692.82 = 693 units t.2

Giuen Annual Ordering cost

a)
= 5.19 = 5

We know.1

b)

Optlmum number of orders/annum = Artnual

Totat inuentory -

wa

defiwd 3600
693

b) Optimum:

c)
d) 4'

cost=9*c+{xr=
2 A

693 2

xl.2+ tf,-o9r.g0=Rs.BSl.B8
693"vv-'re'vvr'v

6. A manufactu
requirements ordering cost

Number of orders/ 1r4r = E orders

.'.

inventory pei

Optimum period of supply per optimum order

Usha corporation currently practices the following system for the procurement of an item. No. of orders in a year = 8, ordering costlris .7\o/order, 6ach time order quanttty =250.units, carrying cost = 40% and, cost of each unit Rs.40/-. = Comment on the ordering policy of the company and estimate the loss to the company in not practicing scientific inventory policy. Solutfon: Giuen, Annual demand, A = 25o x g = 2o00, Inventory carr5ring cost, 40x 0.4 = 16 /unit/annum, Ordering cost, p = 750/order

=! =O.24ears c

purchase poU save the cornl Solufron:

Giuen

Annt

2Ox O.15=3
We know, Q

e=

Totat intsertto

b)
c)

Totol inuentory cost=9xc

4:3 +{xr= 2 A 2 xr6 +'90-0, B' TSo =Rs.6928.2

Optimum ntt Total cost

oJ it

Total cost oJ inuentory under the presentsystem = = Annualordertng cost + Annualinuentory carrying cost = (No.orders/annum) x (ordering cost/order *

8x 780

25O

ry"40

x 0.4

,40x0.4

= Rs.g000

(As per the pr

(As per the present system of ordering, g orders are made a year.)

Loss to the cr

loss to the company tn not operating scientiflc inventory Rs.800O - Rs.6928.2 = Rs.tOZ t.Z2

Rs.l3

Hence. tl

instead of ort

I,UIDU

Vl yqL@ :

t3
E.

Problerns

&

I.

factory warehouse at A plant producrng a lirr of hydraulic values can supply the year at a unit selling per the rate of Tfilm)nth' The **Lf'o""" ships 3000 valves and the inventory of Rs'30O cost oriering plants price of Rr.Z;d. C;;tdering the of 2Oo/o. wt.l !""rruu"" snolutA be the wzyes hose order from carrying the plant."oJot" Soluhon:

tt,o=thequantity,thewarehouseshouldorderfromtheplant. A = Number of items consumed per year = 3000 P = Ordering and set up cost/order = Rs'300 C = Annual inventory carrying cost/item/annum
Total annuul =mryear

it'"ttoty "tttyitg

"oS

Total annual inventory carrying cost = x cost per item x o/o of inventory carryin$ cost = Total ltems consumed/year = 3000 x 250 x 0.20
Tc+-al annual inventory carrying cost - 30O0x250x0.20=RS.SO v ^ _ 3000 - Total items consumed Per Year

2AP
C

= 189.7 say 190 units

2.

is 20units/year. The cost of The rate of use of a particular raw material stores of each units Rs'100' The cost of receiving and placing an order i" R".ro. The cost on the average stock' carrying inventory in percent /y"J i" ro ,rra it depends Determine EO@.
Solution:

I/et,Q=thequanuty,thewarehouseshouldorderfromt]replant. A = Number of items consumed per jear = 2O P = Ordering and set up cost/order = Rs'40 C = Annual inventory carryin$ cost/item/annum
Total annuul =ffieryear

it,"t'19ryjutryi-B

"*!

E. th.

Total annual inventory carrying cost = year x cost per item x o/o of inventory carrying cost = Total items consumed Per =20 xl00x 0.16

annual !:ventory carrying cost . v -To+,al - Total items consumed Per Year
g cos.L

20x100x0.16
20

= Rs.16

2x20x40

= 10 items

S. Indian 5'

*nr E(
Determinc

ipirrsry'""".'

$nE cd.

'"@ ry-t

Yrlrr l,rv------

itrument ptl-Y^1rr--@t*

ffi#,t*""";;];*;:oooP"roid.''
_-_l^<, carrying cost, C = 4Slwlllannum' ^qrnrind cos' Inventory

Sollrtion
A 125O0' GiuenAnnual demand, = 6lffi,i|;o"i' P = 2ooo/order

.)

W" know' Q =
orders/aruru

b) optimumnumberof

^= W=#

--12'24=L2

6 f"f;ilH*Htt;ru'e"'*,{";$ ni
"ii"..e """t

*:'p*v'what ffil"rffi'*" IL""rl:g 'save the comPany Per Yeart

ij)""f,lH: {fi "6$};*',f "'rt:"t""X; f;*";*;"dl to +"*"i.i*"X"ff"#:ffiil

advice vou o

cost'

:::::"

cost' P = 1S/order ordering ^j-lo-?o;"*]?":1?[,0"i*s g'fr"'iti;;';' 0.15 = 20x

We know, Q =

Annuar

demand'

2N
C

ilx 9000 x 15 = 300 units

390 x t5 * 909-0 * 3 = Rs'900 Arutual denwld -9000
3OO

xc+ x r = Totol vuentory cost --9 $

Optimumnumber

of orders/annu^=

- 30

ro,otcos,,r**::1ffi

:#j:;.ffi
=l2xl-c+ ry"3=Rs'1305

"::J:^:;:ry:

a year') 12 orders are made ordering' of system (As per the present inventory = in not opradng scientific Loss to the company Rs'405 Per Year Rs.1305 - R^S'gOO = time interval or purchase 300 parts at should Hence, the company

fiv""t

750 parts each month' instead of ordering