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Let us calculate the raw material requirements based on the forecast results in Problem 3, to perform reasonable inventory control. About 15% of the
Let us calculate the raw material requirements based on the forecast results in Problem 3, to perform reasonable inventory control. About 15% of the total product demand is for high-end portable monitors with back casings made of aluminum alloys. For the remaining 85% of medium to low-end products, their back casings are made of ABS plastics. According to preliminary calculation, on average, the material volume required for the back casing of a monitor is 168 cm. The density of ABS plastics is 1.1g/cm. Based on your forecast of product demand in the second half of the year, you may calculate the factory's requirements for the ABS plastics material. In China, the market price of ordinary ABS plastic particles is about RMB 14,000 to 16,000 per ton. The specific price is related to the delivery location, batch size, quality level, etc. A supplier selected by Company Y offers the following quantity discount prices. (1) If the order quantity is less than 5 tons, the price is RMB 15,500 per ton. (2) When the order quantity is greater than or equal to 5 tons and less than 10 tons, a discounted price is RMB 15,000 per ton. (3) When the order quantity is greater than or equal to 10 tons, the most favorable price is RMB 14,500 per ton. The ordered ABS material will be trucked by the supplier to the Company factory. The delivery fee charged by the supplier is: (1) For a small truck with a maximum load of 8 tons, the expense of one delivery is RMB 500; (2) For a large truck with a maximum load of 20 tons, the expense of one delivery is RMB 800. For example, if you order 26 tons at a time, you must use one large and one small truck. Company Y calculates the inventory holding cost of raw materials at a 20% annual interest rate. In order to simplify the calculation, we tentatively think that the requirements for ABS plastics in the second half of the year are basically uniform. Please determine the reasonable economic order quantity for the ABS plastics material.
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