Question 1 The following information is given by Chris Ltd: Cost of placing a purchase order 20 Number of units to be purchased during the year 5.000 Purchase price per unit inclusive of transport cost 50 Annual Storage cost per unit 5 Details of lead time: Average 10 days Maximum 15 days Minimum 6 days For emergency purchase 4 days Rate of Consumption per day: Average 15 days Average 20 days Calculate: 6) Re-ordering level (ii) Re-order quantity (in) Maximum level (iv) Minimum level (v) Danger level Chris Ltd, uses about 75,000 valves per year and the usage is fairly constant at 6.250 valves per month. The valve costs GH1.50 per unit when bought in large quantities, and the carrying cost is estimated to be 20% of average inventory investment on an annual basis. The cost to place an order and process the delivery is GH18. It takes 45 days to receive delivery from the date of an order and a safety stock of 3.250 valves is desired You are required to determine (1) The most economical order quantity and frequency of orders: (ii) The re order point and (iii) the most economical order quantity if the valves cost Ghe. 4.50 each instead of GH1.50 each. (20Marks) Questions 2 What strategic measures would you as procurement officer put in place to ensure maximum utilization of materials from procurement to consumotionale (10Marks) Question 1 The following information is given by Chris Ltd: Cost of placing a purchase order 20 Number of units to be purchased during the year 5.000 Purchase price per unit inclusive of transport cost 50 Annual Storage cost per unit 5 Details of lead time: Average 10 days Maximum 15 days Minimum 6 days For emergency purchase 4 days Rate of Consumption per day: Average 15 days Average 20 days Calculate: 6) Re-ordering level (ii) Re-order quantity (in) Maximum level (iv) Minimum level (v) Danger level Chris Ltd, uses about 75,000 valves per year and the usage is fairly constant at 6.250 valves per month. The valve costs GH1.50 per unit when bought in large quantities, and the carrying cost is estimated to be 20% of average inventory investment on an annual basis. The cost to place an order and process the delivery is GH18. It takes 45 days to receive delivery from the date of an order and a safety stock of 3.250 valves is desired You are required to determine (1) The most economical order quantity and frequency of orders: (ii) The re order point and (iii) the most economical order quantity if the valves cost Ghe. 4.50 each instead of GH1.50 each. (20Marks) Questions 2 What strategic measures would you as procurement officer put in place to ensure maximum utilization of materials from procurement to consumotionale (10Marks)
