Concerns the establishment of a suitable policy for purchase and stocking of hydraulic oil, a significant item in the company's raw material consumptions. The company has the option of purchasing from a local installation of IOC or from IOC's refinery (taking their blending programme into account) more than five hundred kilometres away. In addition, it also has the option of readily buying substitutable blends of other major oil companies from the local market. The structure of transportation costs involved, costs of placing purchase orders, inventory carrying costs, as well as past data on consumptions and purchase lead time (both showing a fairly high variability) are indicated.