Answer to Question #86167 in Financial Math for kr

Question #86167
(b) The demand for a particular item is 12000 units per year. The ordering cost is Rs. 100 per order and the holding cost is Rs. 0.80 per item per month. If no shortages are allowed and the replacement is instantaneous, determine
(i) The economic order quantity (2 marks)
(ii) The time between orders (2 marks)
(iii) The number of orders per year (1 mark)
(iv) The optimum annual cost if the cost of item is Rs. 2 per item. (2 marks)
Expert's answer
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