Determine the quantity to order

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Reference no: EM131839799

Star Logistic Ltd has established that annual quantity for a given item is 4000 units. The cost of placing an order is Kshs. 5000.00 and the price per unit is Kshs. 2,000.00. Inventory holding cost is 20% of purchasing cost.

Required

a) formulate the best (optimal) entry policy for this item; i.e

1) Quantity to order ( EOQ)

2) Frequency for ordering and when to order

3) Re-order level/point for ROP take lead time to be 15 days while one year has 300 working days

4) Total cost associated with the policy

b) Assume the following figures:

- Annual demand= 1500 units

-Unit cost per item=$10

-Cost per order=$50

-Carrying cost interest rates=20%

-Determine the EOQ

Reference no: EM131839799

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