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5. The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts form steel bars. The management of the Margro
5. The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts form steel bars. The management of the Margro Corporation uses the EOQ decision model to determine the optimal number of steel bars to order. Expected demand for the steel bars to produce expected number of turning machines in a year is 20,000 units. The cost of steel bar per unit is Tk. 50. Carrying cost is 10% per year. The assistant of cost accountant of Margro Corporation calculates the Economic Order Quantity (EOQ) considering ordering cost per order Tk. 500. Margro requires 3 days to receive the ordered goods Required: a) Compute Economic Order Quantity. (1 mark) b) Compute minimum cost of inventory. (1 mark) c) Compute number of order and cycle time. (1 mark) d) What is the reorder point? (1 mark) e) Which one out of four inventory control methods will be appropriate here? (1 mark)
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