OE Modular Test -II Question Bank
OE Modular Test -II Question Bank
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6. Solve the following NLPP by using Lagrange’s Multiplier method:
Subject to
18. The production department for a company requires 3600 kg of raw material for
manufacturing a particular item per year. It has been estimated that the cost of
placing is Rs. 36 and the cost of carrying inventory is 25 percent of the
inventories. The price is Rs.10 per kg. The purchase manager wishes to wishes to
determine an ordering policy for raw material. Calculate the optimal order
quantity, total variable inventory cost and total inventory cost.
19. A company operating 50 weeks in a year is concerned about its stocks of copper
cable. This costs Rs. 240 a meter and there is a demand for 8000 meters a week.
Each replenishment costs Rs. 1050 for administration and Rs. 1650 for delivery,
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while holding costs are estimated at 25 percent of value held a year. Assuming no
shortages are allowed, what is the optimal inventory policy for the company?
20. An enterprise requires 1000 units per month. The ordering cost is estimated to be `
50 per order. In addition to ` 1, the carrying costs are 5% per unit of average
inventory per year. The purchase price is ` 20 per unit. Find the economic lot size
to be ordered and the total minimum cost.
21. The XYZ manufacturing company uses 12000 units of raw material annually,
which costs `1.25 per unit. Placing each order costs `15 and the carrying costs are
15% per year per unit of the average inventory. Find the economic order quantity.
22. The XYZ manufacturing company has determined from an analysis of its
accounting and production data for a part, that its cost to purchase is `36 per order
and `2 per part. Its inventory carrying charge is 18% of the average inventory. The
demand of this part is 10000 units per annum. a) What should the economic order
quantity be? b) What is the optimum number of days supply per optimum order?
23. A manufacturing company purchases 9000 parts of a machine for its annual
requirements, ordering one month usage at a time. Each part cost is Rs.20. The
ordering cost per order is Rs.15 and the carrying charges are 15% of the average
inventory per year. Calculate the optimal order quantity, optimum ordering
interval, total variable inventory cost and total inventory cost.
24. A retail store sales 5200 units of a product in a year. Each unit costs Rs.2 to the
store. The wholesaler charges Rs.10 for each order irrespective of the quantity
ordered. The interest charges on the working capital are 15% and the insurance
charges on inventory amount is 5% per annum. Calculate the optimal order
quantity, optimum ordering interval, total variable inventory cost and total
inventory cost.
25. A wholesaler supplies 300 dolls each week day to various shops. Dolls are
purchased from the manufacturer in lots of 120 each for Rs. 1200 per lot. Every
order incurs handling charges of Rs.60 plus freight charges of Rs.250 per lot. The
incremental cost is Rs. 0.60 per year to store a doll in inventory. The wholesaler
finances inventory investments by paying its holding company2% monthly from
the borrowed funds. Assume that there are 250 week days in a year.
Calculate the optimal order quantity and how frequently should be ordered to
minimize the total inventory cost.