GATE ME 2020 Set 2 — Question 57
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Industrial Engineering → Inventory Control → EOQ with Shortages & Discounts
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Question
For a single item inventory system, the demand is continuous, which is 10000 per year. The replenishment is instantaneous and backorders ( units) per cycle are allowed as shown in the figure.
As soon as the quantity ( units) ordered from the supplier is received, the backordered quantity is issued to the customers. The ordering cost is Rs. 300 per order. The carrying cost is Rs. 4 per unit per year. The cost of backordering is Rs. 25 per unit per year. Based on the total cost minimization criteria, the maximum inventory reached in the system is ________ (round off to nearest integer).
Correct answer
1130 to 1140
Solution
Given:
Demand () = 10000 units/year
Ordering cost () = Rs. 300/order
Holding cost () = Rs. 4/unit/year
Backordering cost () = Rs. 25/unit/year
Demand () = 10000 units/year
Ordering cost () = Rs. 300/order
Holding cost () = Rs. 4/unit/year
Backordering cost () = Rs. 25/unit/year
1.Calculate the Economic Order Quantity () for the backordering model:
2.Calculate the maximum inventory level ():
Rounding to the nearest integer, we get 1137.Continue learning with Success Tracker
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