finance for decision making

ABC Engineering uses 200,000 litres of oil each year in its manufacturing process. The oil is used at a constant rate and can be purchased and received within 20 days. The firm has storage capacity for up to 50,000 litres. The order cost is $300 per order and its carrying cost is $4 per litre per year. You are required to calculate: (use 365 days per year) the Economic Order Quantity (EOQ) for the company's oil; the total cost of the inventory plan suggested by the EOQ; and the company's reorder point in terms of litres. EOQ: 6000 litres; total cost: $10000; reorder point: 4110 litres EOQ: 5758 litres; Total cost: $24000; Reorder point: 10960 litres EOQ: 5000 litres; total cost: $10000; reorder point: 4110 litres EOQ: 5478 litres; Total cost: $22056; Reorder point: 9000 litres EOQ: 5478 litres; Total cost: $22056; Reorder point: 10960 litres The statement concerning the just-in-time inventory management system that is not true is: For the system to work there must be a close relationship between the business and its supplier. The aim of the system is to eliminate the need for the business to hold inventory. The approach is a theoretical one only and has not really been tried in practice. The problem of holding inventory is shifted to the supplier. Which statement concerning the operating cycle is true? Reducing the time period for which inventory is held shortens the operating cycle. It is possible to have a negative operating cycle. The longer the operating cycle the greater the amount of working capital required. All of the statements are true. The item that is not part of working capital is: inventory. plant. debtors. cash. Management of working capital is important because it affects the firm's: risk. liquidity. profitability. all of the above