Question

M/s KD Gears buys its requirement of castings of engine gears
every quarter. The average monthly requirement of casting is
500 nos. 10% extra castings are procured to compensate the
defectives. The procurement cost and inventory carrying cost
have been estimated at Rs. 50 per order and 24% of average
inventory investment respectively. If the purchase price of
engine gear casting is Rs. 11
a. In what economic lots castings of engine gear to be
procured?
b. What is the existing inventory cost of existing inventory
policy?
c. How much company can save per year by changing to
economic lot size purchasing

Answer 1

Answer:

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