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Effect of Economic Order Quantity at Small Scale Textile Mill:A Case Study


Affiliations
1 Department of Mechanical Engineering, Nagpur Institute Technology, Nagpur, India
2 Department of Mechanical Engineering, Priyadarshani Bhagawati College of Engineering, Nagpur, India
     

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This paper evaluates inventory situation at Shivkumar Textiles Maharashtra Solapur. The objective of this paper is to develop the Economic Order Quantity (EOQ) model that will be used to determine number of units of an item to order at a time and the re-order point (r), that is the level to which stocks of items are allowed to fall before ordering other items, for raw materials. The resulting EOQ for each raw material is compared to the actual ordered quantities so as to see whether there is any relationship between them in operational cost reduction. The comparison of operational cost reduction was done by using normal distribution test. MS Excel was used to find EOQ and the re-order point. The results show that the relationship between the EOQs and the ordered quantities in terms of operational cost reduction was significant. Therefore, it was concluded that the ordered quantities at Shivkumar Textile mill were not optimal.

Keywords

Inventory, Cost Reduction EOQ, Re-Order Point, Total Cost.
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  • Effect of Economic Order Quantity at Small Scale Textile Mill:A Case Study

Abstract Views: 185  |  PDF Views: 0

Authors

S. M. Kavishwar
Department of Mechanical Engineering, Nagpur Institute Technology, Nagpur, India
S. P. Daf
Department of Mechanical Engineering, Priyadarshani Bhagawati College of Engineering, Nagpur, India
P. R. Daharwal
Department of Mechanical Engineering, Nagpur Institute Technology, Nagpur, India

Abstract


This paper evaluates inventory situation at Shivkumar Textiles Maharashtra Solapur. The objective of this paper is to develop the Economic Order Quantity (EOQ) model that will be used to determine number of units of an item to order at a time and the re-order point (r), that is the level to which stocks of items are allowed to fall before ordering other items, for raw materials. The resulting EOQ for each raw material is compared to the actual ordered quantities so as to see whether there is any relationship between them in operational cost reduction. The comparison of operational cost reduction was done by using normal distribution test. MS Excel was used to find EOQ and the re-order point. The results show that the relationship between the EOQs and the ordered quantities in terms of operational cost reduction was significant. Therefore, it was concluded that the ordered quantities at Shivkumar Textile mill were not optimal.

Keywords


Inventory, Cost Reduction EOQ, Re-Order Point, Total Cost.