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Question 1: The demand for a purchased item is 2000 units per month and the shortages are allowed. If the unit cost is Rs 20 per unit, the cost of making one purchase is Rs 1000, the holding cost for 1 unit is Rs 20 per year and the cost of one shortage is Rs 500 per year, determine:
- (a) The economic purchase quantity.
- (b) The time between orders.
- (c) The number of orders per year.
- (d) The optimum shortages.
- (e) The maximum inventory.
- (f) The time of items being held.
- (g) The optimum annual cost.
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