Question
3. Nerolac Galore buys a standard type of roof paint (called Supreme Star Roof) in 50 litre containers at a price of P800 per container.
3. Nerolac Galore buys a standard type of roof paint (called Supreme Star Roof) in 50 litre containers at a price of P800 per container. 19 200 of these containers are used each year. The stock controller estimates that the cost of placing and receiving a typical Supreme Star Roof order is P450. The controllers estimate of the annual cost of carrying this product is P6 per container. Suppose Nerolac Galore was to order 800 containers of Supreme Star Roof per order placed during the year. Calculate the following: (a) Number of orders (1 mark) (b) Annual ordering cost (2 marks) (c) Average quantity in inventory (1 marks) (d) Annual holding cost (3 marks) (e) Total annual cost of inventory (3 marks)
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