Question

6. (a) A contractor has to supply 10,000 bearings per day to an automobile manufacturer.

He finds that when he starts production run, he can produce 25,000 bearings per day.

The cost of holding a bearing in stock for one year is Rs. 2 and the set up cost of a

production run is Rs. 180. Find the EOQ. How frequently should the production run

he made? (5)

Answer 1

$2sd=2.180.10000=360,0000$

$h(1-d/r) = 2/365 .3/5$ = 6/1825

$360,0000/(6/1825)=1095000000$

$Q*=\sqrt{1095000000} =33090.78422$

$T*=Q*/d =33090/10000=3.33$

hence T*=3 and Q*=30,000 is the practical solution to this problem.