management activity question 3

ABC Ltd is planning to launch a new product and budgets to use an annual 54560 units of a special material for production. The material will be used during the year at an even rate. The purchasing manager has decided he is going to place orders for 1760 units at regular intervals during the year. The costs associated with the material are as follows: 1. Purchase price NS 3.84 per unit. 2. Ordering costs NS 6.40 per order. 3. Holding costs per unit are 20% of the purchase price. QUESTION 4 [15 MARKS] Ndama electronics is a business that was established in Rundu by two ambitious UNAM engineering graduates to build mass-produced karts. To build the karts, 5 skilled workmen working a standard 40-hour week are required. Production has only just started with the worklorce, who are Rundu VTC graduates, keen to leam quickly. When the first kart was buit unfoctunately, the time taken was not recorded. However, they did record the time used to produce the third unil and the average time for all units at that point was 11,36 hours. Based on previous knowledge, the two UNAM graduates beleve that there is a 70% leaming rate of the new workmen. Page 14 of 19 FACULTY OF COMMERCE, MANAGEMENT AND LAW OLD CURRICULUM MODULES