1Mechanical Engg. Department, PEC University of Technology (formerly Punjab Engineering College), Chandigarh-160012, India. E-mail: deepaknain303@gmail.com
2Assistant Professor in the, department of Mechanical Engineering, PEC University of Technology (formerly Punjab Engineering College), Chandigarh-160012, India
Online published on 25 May, 2016.
Inventory plays an important role for an organization for its efficient working. This paper deals with the computation of inventory turnover ratio and optimization of the inventory costs by using basic Economic order Quantity (EOQ) model. The various costs related to inventories have also been computed for ten main items of a manufacturing industry. The turnover ratios of ten items have been computed for the last four years. The total variable costs for managing the inventory by using the EOQ have been computed and compared with the total cost without EOQ model. It is found that there is a 20% reduction in the total variable costs by using EOQ model.
EOQ model, Total variable costs, turnover ratio, manufacturing industry
