Maintaining the buffer stock

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Reference no: EM13133400

A petrochemical manufacturing company procures a specific chemical compound which costs Rs. 100 per kg. The cost incurred in placing the order has been worked out as Rs. 15 per order. The cost incurred in storage is 5% of purchase price per unit and 4% are insurance charges and 2% are expenses on misc. heads related to holding the compound. Annual usage is 5000 kg. Buffer stock maintained is 200 kg and average lead time is 5 days.

Calculate the following:

a) EOQ

b) Total inventory cost

c) ROL

d) Maximum Inventory

Reference no: EM13133400

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