Question

In machine shops, pins of 15 mm diameter are produced at a range of 1000 per month and the same is consumed at a rate of 500 per month. The production and consumption continue simultaneously till the maximum inventory is reached. Then inventory is allowed to reduce to zero due to consumption. The lot size of production is 1000. If backlog is not allowed, the maximum inventory level is

• A. 500
• B. 600
• C. 400
• D. 700

Answer 1

The correct option is A 500


$\text{Maximum inventory level,}$

$Q_m=(p-d)\frac{Q}{P}$

$\text{Here}$

$\text{p = 1000 per month}$

$\text{d = 500 per month}$

$\text{Q = 1000 pins}$

$\therefore \text{Maximum inventory level}$

$Q_m=(1000-500)\times \frac{1000}{1000}=500\text{pins}$