Transport cost per ton/quintity

S.no
1 karad
2 kirloskar
3 pune
4 kalyan
5 quantity per shipment

warehouse capacity and re

S.no Destination
1 karad
2 kirloskar
3 pune
4 kalyan
Transport cost per ton/quintity per shipment
Rail-rake Rail-wagon Road
660 695 1110
660 695 1060
640 670 940
600 630 950
1600 22 10

warehouse capacity and related cost

Transport and
warehouse cost of add. Storage handling
capacity(tons) (Rs/ton/month) cost(rs/ton)
6000
1400 6 12
1400 10 20
1400 12 20
production at: Karad
kirloskarwadi
Pune
kalyan
Total west zone requirement

1 Road cost

Transport cost per ton in Rs

Karad 1110
kirloskarwadi 1060
Pune 940
kalyan 950

2 Rail-rake

Transport cost per ton in Rs

Karad 660
kirloskarwadi 660
Pune 640
kalyan 600

3 Rail-Wagon

Transport cost per ton in Rs

Karad 695
kirloskarwadi 695
Pune 670
kalyan 630

Two point booking method

4 Rail-rake

Transport cost per ton in Rs

Karad 660
kirloskarwadi 660
Pune 640
kalyan 600
Production(tons) Demand(tons)
60000 24000 Cycle Inventory(C.I)
40000 16000 safety stock(SS)
40000 16000 In-transit inventory(I.T.I)
25000 9000 Holding Cost
165000 65000 Total cost

Avg lot size(10-13) 12 Avg Lead time(5-7) 6

Demand ordering cost safety stock(SS) In-transit inventory(I.T.I)

24000 26640000 218959 437918
16000 16960000 139397 278795
16000 15040000 123616 247233
9000 8550000 70274 140548
552247 1104493

Avg lot size 1600 Avg lead time 15

Demand ordering cost safety stock(SS) In-transit inventory(I.T.I)

24000 15840000 325479 564164
16000 10560000 216986 376110
16000 10240000 210411 364712
9000 5400000 110959 192329
863836 1497315

Avg lot size 22 Avg lead time 25

Demand ordering cost safety stock(SS) In-transit inventory(I.T.I)

24000 16680000 571233 1736548
16000 11120000 380822 1157699
16000 10720000 367123 1116055
9000 5670000 194178 590301
1513356 4600603

(As karad and kirloskerwadi are less than 100 km apart we used two point booking meth

Avg lot size 1600 Avg lead time 15

Demand ordering cost safety stock(SS) In-transit inventory(I.T.I)

 24000 15840000 325479 564164
16000 10560000 216986 376110
16000 10240000 210411 364712
9000 5400000 110959 192329

cost saved using Two point booking method 5426400

 lot size/2
lead time*demand/(2*365)
lead time*demand/(365)
15% of average price of raw material
Total avg inventory cost + holding cost

Avg transit time 6

cost of additional tranport and

Holding cost storage handling cost Total Cost
2520000 0 0 29840877
1680000 1051200 175200 20300592
1680000 1752000 292000 19150849
945000 1094400 152000 10961222
6825000 Total 80253540

transit time 13

cost of additional tranport and

Holding cost storage handling cost Total Cost
2520000 0 0 19273644
1680000 1051200 175200 14075496
1680000 1752000 292000 14555123
945000 1094400 152000 7903688
6825000 Total 55807951

Avg transit time 38

cost of additional tranport and

Holding cost storage handling cost Total Cost
2520000 0 0 21531781
1680000 1051200 175200 15580921
1680000 1752000 292000 15943178
945000 1094400 152000 8654879
6825000 Total 61710759

o point booking method here)

Avg transit time 13

cost of additional tranport and

Holding cost storage handling cost Total Cost
 0 0 0 16753644
0 0 0 11169096
1680000 1752000 292000 14555123
945000 1094400 152000 7903688
total 50381551