Al-Mubarak Electrics manufactures and sells stereo and CD sound systems in both console and component styles. All parts of the sound systems, with the exception of speakers, are produced in the Rochester, New York, plant. Speakers used in the assembly of Al-Mubarak Electrics are purchased from Morris Electronics of Concord, New Hampshire. Jason Pierce, purchasing agent for Al-Mubarak Electrics, submits a purchase requisition for the speakers once every four weeks. The companys annual requirements total 500 units (20 per working day), and the cost per unit is Rs. 6. (Al-Mubarak Electrics does not purchase in greater quantities because Morris Electronics, the supplier, does not offer quantity discounts.) Rarely does a shortage of speakers occur because Morris promises delivery within 1 week following receipt of a purchase requisition. (Total time between date of order and date of receipt is 10 days.) Associated with the purchase of each shipment are procurement costs. These costs, which amount to Rs. 2 per order, include the costs of preparing the requisition, inspecting and storing the delivered goods, updating inventory records, and issuing a voucher and a check for payment. In addition to procurement costs, Al-Mubarak Electrics incurs inventory carrying costs, which include costs of insurance, storage, handling, taxes, and so on. These costs equal Rs. 0.6 per unit per year. Beginning in August of this year, management of Al-Mubarak Electrics will embark on a companywide cost control program in an attempt to improve its profits. One of the areas to be scrutinized closely for possible cost savings is inventory procurement. Requirements: 1.Determines the ordering cost of Al-Mubarak Electrics. 2.Determines the holding cost of Al-Mubarak Electrics.

3.Compute the total cost of Al-Mubarak Electrics. 4.Compute the optimal ordering quantity of Al-Mubarak Electrics and also interprets the findings. 5.Determines the re-order point of Al-Mubarak Electrics. 6.Compute the lead time of Al-Mubarak Electrics.

Note : Subject : introduction to production management

Al-Mubarak Electrics manufactures and sells stereo and CD sound systems in both console and component styles. All parts of the sound systems, with the exception of speakers, are produced in the Rochester, New York, plant. Speakers used in the assembly of Al-Mubarak Electrics are purchased from Morris Electronics of Concord, New Hampshire. Jason Pierce, purchasing agent for Al-Mubarak Electrics, submits a purchase requisition for the speakers once every four weeks. The company's annual requirements total 500 units (20 per working day), and the cost per unit is Rs. 6. (Al- Mubarak Electrics does not purchase in greater quantities because Morris Electronics, the supplier, does not offer quantity discounts.) Rarely does a shortage of speakers occur because Morris promises delivery within 1 week following receipt of a purchase requisition. (Total time between date of order and date of receipt is 10 days.) Associated with the purchase of each shipment are procurement costs. These costs, which amount to Rs. 2 per order, include the costs of preparing the requisition, inspecting and storing the delivered goods, updating inventory records, and issuing a voucher and a check for payment. In addition to procurement costs, Al-Mubarak Electrics incurs inventory carrying costs, which include costs of insurance, storage, handling, taxes, and so on. These costs equal Rs. 0.6 per unit per year. Beginning in August of this year, management of Al-Mubarak Electrics will embark on a companywide cost control program in an attempt to improve its profits. One of the areas to be scrutinized closely for possible cost savings is inventory procurement. Requirements: a) Determines the ordering cost of Al-Mubarak Electrics. b) Determines the holding cost of Al-Mubarak Electrics. c) Compute the total cost of Al-Mubarak Electrics. d) Compute the optimal ordering quantity of Al-Mubarak Electrics and also interprets the findings. e) Determines the re-order point of Al-Mubarak Electrics. f) Compute the lead time of Al-Mubarak Electrics