GATE Production - GATE 2017-2018 Questions and Answers

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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.

To avoid stock out situations, the retailer needs to place orders when the inventory level (in kg) drops to