Annual demand = 10000 units ,Cost of ordering = Rs. 200 per order, Cost of holding = 15%, Cost per unit = Rs. 300 per unit, Days in a year = 300 days/year, Calculate: a. Infinite replenishment rate model b. Finite/Gradual replenishment model (also known as production model). Annual procurement/production = 15000 units
Expert Answer
Infinite replenishment model :
As per this model external demanders remove items from the inventory and external suppliers replenish the inventory. Rather than demand occurring in a random and uncertain manner, we assume that items are withdrawn from the inventory at a continuous rate. Replenishments
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