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Calculate the number of orders to be placed per year

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Question - Pak Punjab recently started a new brand. The monthly demand has increased from 1000 kg to 2000 kg. This has caused their monthly consumption to increase from 1,666.67 kg to 3,333.33 kg. They placed their order of raw material to Gohar Traders who gave them 20% discount on market rate that is Rs.37 per kg. They Ordering Cost will be 166% of purchase price per kg. The company has to bear storage cost of 5% on average inventory. Interest cost will be 2 % per year while obsolescence cost is now increased to 8% from 5%.

REQUIRED -

a) Calculate EOQ from the information given above and interpret the result.

b) Calculate the number of orders to be placed per year.

c) Calculate Total Ordering Cost & Total Carrying Cost.

Reference no: EM132613935

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