(a) A company uses 15,000 units of stock item 6786 each year. The item has a purchase cost of Rs.4 per unit. The cost of

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(a) A company uses 15,000 units of stock item 6786 each year.
The item has a purchase cost of Rs.4 per unit. The cost of placing
an order for re-supply isRs.220. The annual holding cost of one
unit of the item is 10% of its purchase cost.
Required
(i) What is the economic order quantity for item 6786, to the
nearest unit?
(ii) What would be the effect of an increase in the annual holding
cost per unit on (1) the EOQ and (2) total annual ordering
costs?
(b) Data relating to stores item 6787 are as follows.
Daily use: 300 units Lead time for re-supply: 5 – 20 days Reorder
quantity: 10,000 units
Required What should be the reorder level for this stock item, to
avoid the possibility of inventory-outs?