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The demand of a certain part is 1000 parts/year and its cost is Rs. 1000/part. The orders are placed based on the economic order quantity (EOQ). The cost of ordering is Rs. 100/order and the lead time for receiving the orders is 5 days. If the holding cost is Rs. 20/part/year, the inventory level for placing the orders is _________ parts (round off to the nearest integer).
Correct answer is '14'. Can you explain this answer?
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The demand of a certain part is 1000 parts/year and its cost is Rs. 10...
Given data:
Demand = 1000 parts/year
Cost per part = Rs. 1000/part
Ordering cost = Rs. 100/order
Lead time = 5 days
Holding cost = Rs. 20/part/year
To find the inventory level for placing the orders, we need to calculate the Economic Order Quantity (EOQ) using the given data.
Calculating EOQ:
The EOQ formula is given by:
EOQ = √((2 * Demand * Ordering cost) / Holding cost)
Substituting the given values:
EOQ = √((2 * 1000 * 100) / 20)
EOQ = √(2000000 / 20)
EOQ = √100000
EOQ = 316.22 (approx.)
Since we need to round off the answer to the nearest integer, the EOQ is 316.
Calculating the inventory level:
The inventory level is the quantity of parts that should be available in stock when an order is placed. It is calculated by adding the demand during lead time to the EOQ.
Inventory level = Demand during lead time + EOQ
Demand during lead time = Demand * (Lead time / 365)
Demand during lead time = 1000 * (5 / 365)
Demand during lead time = 13.70 (approx.)
Inventory level = 13.70 + 316
Inventory level = 329.70 (approx.)
Rounding off the inventory level to the nearest integer, we get 330.
Therefore, the inventory level for placing the orders is 330 parts (rounded off to the nearest integer).
However, the correct answer is given as 14, which seems to be a mistake. The calculated inventory level should be 330, not 14.
Demand = 1000 parts/year
Cost per part = Rs. 1000/part
Ordering cost = Rs. 100/order
Lead time = 5 days
Holding cost = Rs. 20/part/year
To find the inventory level for placing the orders, we need to calculate the Economic Order Quantity (EOQ) using the given data.
Calculating EOQ:
The EOQ formula is given by:
EOQ = √((2 * Demand * Ordering cost) / Holding cost)
Substituting the given values:
EOQ = √((2 * 1000 * 100) / 20)
EOQ = √(2000000 / 20)
EOQ = √100000
EOQ = 316.22 (approx.)
Since we need to round off the answer to the nearest integer, the EOQ is 316.
Calculating the inventory level:
The inventory level is the quantity of parts that should be available in stock when an order is placed. It is calculated by adding the demand during lead time to the EOQ.
Inventory level = Demand during lead time + EOQ
Demand during lead time = Demand * (Lead time / 365)
Demand during lead time = 1000 * (5 / 365)
Demand during lead time = 13.70 (approx.)
Inventory level = 13.70 + 316
Inventory level = 329.70 (approx.)
Rounding off the inventory level to the nearest integer, we get 330.
Therefore, the inventory level for placing the orders is 330 parts (rounded off to the nearest integer).
However, the correct answer is given as 14, which seems to be a mistake. The calculated inventory level should be 330, not 14.
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The demand of a certain part is 1000 parts/year and its cost is Rs. 10...
Given :
Demand of certain part (D) = 1000 parts/year
Cost (C) = Rs . 1000/part
Ordering cost (C0) = Rs. 100 / order
Lead time (LT) 5 days T
Holding cost (Ch) Rs. 20/part/year
Where, R.O.L = Re-order level
∵ R.O.L = LT x d … (i)
Where, d = consumption per day
From equation (i),
R.O.L = 13.69
14 parts Hence, the inventory level for placing the orders is 14 parts.
Demand of certain part (D) = 1000 parts/year
Cost (C) = Rs . 1000/part
Ordering cost (C0) = Rs. 100 / order
Lead time (LT) 5 days T
Holding cost (Ch) Rs. 20/part/year
Where, R.O.L = Re-order level
∵ R.O.L = LT x d … (i)
Where, d = consumption per day
From equation (i),
R.O.L = 13.69
14 parts Hence, the inventory level for placing the orders is 14 parts.Attention Mechanical Engineering Students!
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The demand of a certain part is 1000 parts/year and its cost is Rs. 1000/part. The orders are placed based on the economic order quantity (EOQ). The cost of ordering is Rs. 100/order and the lead time for receiving the orders is 5 days. If the holding cost is Rs. 20/part/year, the inventory level for placing the orders is _________ parts (round off to the nearest integer).Correct answer is '14'. Can you explain this answer?
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