QUESTION $1$

A motor parts supplier presents the following data in respect of their purchases:

Annual demand

Maximum daily requirement

Average daily requirement

Carrying cost

Ordering cost

Lead time

Time needed to acquire emergency supplies

$212000$ units

$1800$ units

$1060$ units

$R1,80$ per unit

R $40$ per order

$14$ days

$3$ days

NB: Assume that sales are even throughout the year.

Required:

$1\mathrm{.}1\mathrm{.}1$ Determine the economic order quantity $($EOQ$).$

$1\mathrm{.}1\mathrm{.}2$ Determine the ordering point.

$1\mathrm{.}1\mathrm{.}3$ Calculate the danger level.

$1\mathrm{.}2$ Assume that Time Ltd are offered terms of $1,\frac{5}{10}$ net $30.$ If the embedded discount is not taken, then the full amount becomes due. Calculate the cost of forgoing the discount.

$1\mathrm{.}3$ Bros Ltd factors all its accounts receivables. The factoring agreement they have concluded is that a $10\%$ reserve is held and a $3\%$ commission is charged on the boc value of the account. Further interest is charged at $2\%$ per month $(60\%$ per annum$)$ advances. Bros Ltd wants to factor an account of R$8000$ that falls due in $30$ days.

$1\mathrm{.}3\mathrm{.}1$ Calculate the advance that Bros Ltd will receive.

$1\mathrm{.}3\mathrm{.}2$ Calculate the net cost to Bros.