A company manufactures a standard electrical component and operates 12 months a year. The product…

A company manufactures a standard electrical component and operates 12 months a year. The product has steady demand, and raw materials are ordered in fixed batch quantities. All finished goods are shipped immediately after production. The company wants to reduce its inventory-related costs by using the Economic Order Quantity (EOQ) model. Raw materials are delivered 5 working days after placing an order. The company operates 24 working days per month. Below is the relevant data:
Table: Operational Data
Parameter
Value
Monthly Demand
8,000 units
Annual Demand
96,000 units
Unit Cost of Material
₹400
Annual Holding Cost Rate
25% of unit cost
Ordering Cost per Order
₹2,000
Lead Time
5 working days
Working Days per Month
24 days
(A)Use the EOQ formula to calculate the Economic Order Quantity. (Show the formula and all steps.)
(B) Based on the EOQ, calculate:
i) Number of orders placed per year
ii) Total ordering cost per year
(C) Find the following:
i) Average inventory level
ii) Total annual holding cost
(D) Calculate the Reorder Point (ROP) assuming uniform daily demand.
(E) Draw a flowchart with these steps in order: Place Order Supplier Delivers Store Raw Materials Produce Goods Dispatch Finished Goods Use standard flowchart shapes and arrows to show the flow.
Flowchart (illustrative SVG representation using standard flowchart shapes and arrows):