Question

The annual requirement of rivets at a ship manufacturing company is 2000 units. The rivets are supplied in units of 1 kg costing Rs. 25 each. If it costs Rs. 100 to place an order and the annual cost of carrying one unit is 9% of its purchase cost, the cycle length of the order (in days) will be .

• A. 76.948

Answer 1

The correct option is A 76.948
$Q^{\ast }=\sqrt{\frac{2D{C}_o}{C_h}}$

$Q^{\ast }=\sqrt{\frac{2\times 2000\times 100}{0.09\times 25}}=421.637$

$\text{No. of orders,}N=\frac{D}{Q^{\ast }}=4.7434$

$\therefore T=\frac{1}{N}=0.2108\text{year}$

$\text{= 76.948 days}$