Question
The demand for soap at a retailer is 40 kg per day. The retailer buys soap from a company in bulk at the
cost of Rs. 50 per kg. The retailer incurs a cost of Rs. 200 to place an order to the company, and a holding
cost of Rs. 0.1 per kg per day to store the soap. The lead time between the placing and receiving of orders
is 3 days. The retailer's current ordering policy is to order 200 kg every 5 days. If the retailer uses an optimum order policy to minimize the total cost, the saving in Rs. in the total
cost as compared to the current policy will be
cost of Rs. 50 per kg. The retailer incurs a cost of Rs. 200 to place an order to the company, and a holding
cost of Rs. 0.1 per kg per day to store the soap. The lead time between the placing and receiving of orders
is 3 days. The retailer's current ordering policy is to order 200 kg every 5 days. If the retailer uses an optimum order policy to minimize the total cost, the saving in Rs. in the total
cost as compared to the current policy will be
Answer: Option A
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