GATE ME 2022 Set 2 — Question 33
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Industrial Engineering → Inventory Control → Reorder Point & Safety Stock
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Question
The demand of a certain part is parts/year and its cost is /part. The orders are placed based on the economic order quantity (EOQ). The cost of ordering is /order and the lead time for receiving the orders is days. If the holding cost is /part/year, the inventory level for placing the orders is _________ parts (round off to the nearest integer).
Correct answer
13 to 15
Solution
To find the inventory level for placing the orders, we need to calculate the Re-Order Level (ROL).Given Data:
Assuming a standard year of days:Step 2: Calculate the Re-Order Level (ROL)
The Re-Order Level is the inventory level at which a new order is placed to ensure stock does not run out during the lead time.Step 3: Round to the nearest integer
Rounding to the nearest integer gives .(Note: If using days, , . Both assumptions fall within the official range of to .)
- Annual Demand () = parts/year
- Cost of ordering () = /order
- Holding cost () = /part/year
- Lead time () = days
Assuming a standard year of days:Step 2: Calculate the Re-Order Level (ROL)
The Re-Order Level is the inventory level at which a new order is placed to ensure stock does not run out during the lead time.Step 3: Round to the nearest integer
Rounding to the nearest integer gives .(Note: If using days, , . Both assumptions fall within the official range of to .)
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