Star Logistic Ltd has established that annual quantity for a given item is 4000 units. The cost of placing an order is Kshs. 5000.00 and the price per unit is Kshs. 2,000.00. Inventory holding cost is 20% of purchasing cost.
Required
a) formulate the best (optimal) entry policy for this item; i.e
1) Quantity to order ( EOQ)
2) Frequency for ordering and when to order
3) Re-order level/point for ROP take lead time to be 15 days while one year has 300 working days
4) Total cost associated with the policy
b) Assume the following figures:
- Annual demand= 1500 units
-Unit cost per item=$10
-Cost per order=$50
-Carrying cost interest rates=20%
-Determine the EOQ