Q-1. (a) Pioneer Stores is trying to determine the economic order quantity for a certain type
of machine tool. The firm sells 60,000 numbers of this machine tool annually at a
price of Rs.80/- per piece. The purchase price per machine tool to the firm is,
however, Rs.65/-. The cost of carrying a machine tool is Rs.10/- per year and the
cost of placing an order is Rs.80/-. What is the total cost associated with placing
one, two, five, and ten orders per year? What is the economic order quantity?
(4)
(b) \"The management of inventory must meet two opposing needs.\" Comment on the
above statement and explain how a trade-off may be achieved between the two
needs?