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    EOQ, CSL, ESC, FR Calculations

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    Prakhar Gupta
    1) The document presents inventory data for three products (A, B, C) under two delivery scenarios: independent and joint delivery. 2) Under independent delivery, there are more orders placed with higher logistics and inventory costs. 3) With joint delivery and a 5000 unit truck capacity, fewer orders are placed resulting in lower logistics costs that provide a 25.75% savings over independent delivery.

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    EOQ, CSL, ESC, FR Calculations

    Uploaded by

    Prakhar Gupta
    38 views4 pages
    1) The document presents inventory data for three products (A, B, C) under two delivery scenarios: independent and joint delivery. 2) Under independent delivery, there are more orders placed with higher logistics and inventory costs. 3) With joint delivery and a 5000 unit truck capacity, fewer orders are placed resulting in lower logistics costs that provide a 25.75% savings over independent delivery.

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    AHP and Topsis performed in excel with explanation of all the steps

    Original Title

    EOQ, CSL, ESC, fr calculations

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    1) The document presents inventory data for three products (A, B, C) under two delivery scenarios: independent and joint delivery. 2) Under independent delivery, there are more orders placed with higher logistics and inventory costs. 3) With joint delivery and a 5000 unit truck capacity, fewer orders are placed resulting in lower logistics costs that provide a 25.75% savings over independent delivery.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    38 views4 pages

    EOQ, CSL, ESC, FR Calculations

    Uploaded by

    Prakhar Gupta
    1) The document presents inventory data for three products (A, B, C) under two delivery scenarios: independent and joint delivery. 2) Under independent delivery, there are more orders placed with higher logistics and inventory costs. 3) With joint delivery and a 5000 unit truck capacity, fewer orders are placed resulting in lower logistics costs that provide a 25.75% savings over independent delivery.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    You are on page 1of 4

    Scenario - I: Orders are delivered independently

    Particulars Product A Product B Product C


    Demand/year (units) 25,000 18,000 5,000
    Fixed cost/order (INR) 10,000 10,000 10,000
    Variable cost/order (INR) 4,000 3,000 3,000
    Holding cost/year (%) 15 12 18
    Cost/unit (INR) 375 510 265
    Economic order quantity (EOQ) 3,528 2,765 1,651
    Cycle inventory (CI) 1,764 1,383 825
    No. of orders 7 7 3
    Holding cost (INR) 99,216 84,619 39,373
    Ordering costs 99,216 84,619 39,373
    Cost of the items 9,375,000 9,180,000 1,325,000
    Logistics costs 198,431 169,238 78,746
    Inventory costs 9,573,431 9,349,238 1,403,746
    Aggregate inventory costs 20,326,416

    Logistics cost in scenario - I (INR) 446,416


    Logistics cost in scenario - II (INR) 331,442
    Logistics cost that is saved (INR) 114,974
    Logistics cost that is saved (%) 25.75

    Task:
    (I) Product and A and Product C can't be delivered together
    (II) If capacity of the truck is restricted to 5000 units
    Scenario - II: Orders are delivered jointly
    Particulars Product A Product B Product C
    Demand/year (units) 25,000 18,000 5,000
    Fixed cost/order (INR) 10,000 10,000 10,000
    Variable cost/order (INR) 4,000 3,000 3,000
    Holding cost/year (%) 15 12 18
    Cost/unit (INR) 375 510 265
    Economic order quantity (EOQ) 3,017 2,172 603
    Cycle inventory (CI) 1,509 1,086 302
    No. of orders 8
    Holding cost (INR) 84,856 66,473 14,392
    Ordering costs 165,721
    Cost of the items 9,375,000 9,180,000 1,325,000
    Logistics costs 331,442
    Inventory costs 20,211,442
    Aggregate inventory costs
    Av. demand/week (units) 10,000 Calculating CS
    Lead time (weeks) 2 Order no. ROP SS SigmaL
    Std. deviation (sigma) 1,000 1 20000 0 1,414
    Demand during lead time (units) (DL) 20,000 2 20050 50 1,414
    Std. deviation during the lead time 1414 3 20100 100 1,414
    4 20200 200 1,414
    5 20350 350 1,414
    6 20500 500 1,414
    7 20600 600 1,414
    8 20750 750 1,414
    9 20850 850 1,414
    10 20950 950 1,414

    The company has a policy of EOQ

    Calculating ROP from CSL


    CSL SigmaL SS DL
    0.50 1,414 0 20,000
    0.51 1,414 50 20,000
    0.53 1,414 100 20,000
    0.56 1,414 200 20,000
    0.60 1,414 350 20,000
    0.64 1,414 500 20,000
    0.66 1,414 600 20,000
    0.70 1,414 750 20,000
    0.76 1,414 1000 20,000
    0.80 1,414 1200 20,000
    Calculating CSL, ESC and fr
    z CSL NCSL fs(z) ESC fr
    0.00 0.50 0.50 0.40 564 0.94
    0.04 0.51 0.49 0.40 540 0.95
    0.07 0.53 0.47 0.40 516 0.95
    0.14 0.56 0.44 0.39 470 0.95
    0.25 0.60 0.40 0.39 406 0.96
    0.35 0.64 0.36 0.37 349 0.97
    0.42 0.66 0.34 0.36 314 0.97
    0.53 0.70 0.30 0.35 267 0.97
    0.60 0.73 0.27 0.33 238 0.98
    0.67 0.75 0.25 0.32 212 0.98

    10000

    om CSL
    ROP
    20,000
    20,050
    20,100
    20,200
    20,350
    20,500
    20,600
    20,750
    21,000
    21,200

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