GATE ME 2016 Set 2 — Question 64
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Industrial Engineering → Inventory Control → EOQ with Shortages & Discounts
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Question
A food processing company uses of corn flour every year. The quantity-discount price of corn flour is provided in the table below:
The order processing charges are . The handling plus carry-over charge on an annual basis is of the purchase price of the corn flour per kg. The optimal order quantity (in kg) is _____________
| Quantity (kg) | Unit price (Rs/kg) |
|---|---|
| 1-749 | 70 |
| 750-1499 | 65 |
| 1500 and above | 60 |
Correct answer
1499 to 1501
Solution
Given:
Total Cost
- Annual Demand () =
- Ordering Cost () =
- Inventory carrying cost percentage () =
Total Cost
1.At ():
2.At (Breakpoint for ):
Since , the optimal order quantity is .Continue learning with Success Tracker
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