A materials manager had recently attend a short training programme on materials management. He thought of applying some of the optimization concepts that he had learnt. He picked on the item havin code BV 1960 valves. The accounting information system revealed that the carrying cost was Rs.0.40 per value per year, whereas the ordering cost was Rs.5.50 per order. The current policy adopted in the company was to order for 400 valves at a time. Is this an optimal policy? What would be the annual savings if the EOQ concept was applied?