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Question 2 Compact Ltd is a retailer of bottled Fruit drinks. The company has an annual demand of 19 000 containers. The container cost
Question 2 Compact Ltd is a retailer of bottled Fruit drinks. The company has an annual demand of 19 000 containers. The container cost 10 each. The ordering costs and the cost of carriage inwards are $150 per order. The annual cost of holding one container in inventory is estimated to be $2.00 Required: A. Calculate the economic order quantity (EOQ) from the above information. (2 marks) B. The following data was obtained from a company's records: Minimum lead time 12 days Average lead time 16 days Maximum lead time Maximum usage 24 days Minimum usage Re-order quantity Calculate: 1600 units per day 1400 units per day 20 000 units i. Average usage ii. Reorder level iii. Minimum Control Level (2 marks) (2 marks) (2 marks) (2 marks) C. iv. Maximum Control Level Compact Ltd. is a trader in bottled Drinks and had the following transactions for the month of March 2020. Purchases (Bought) Mar 08 80 units @ $200 Mar 11 Mar 13 60 units @230 Mar 15 Sales(sold) 70 units @ $340 55 units @ $290 Mar 20 75 units @ $250 Required: Calculate the closing stock using FIFO and AVCO for Compact Ltd. (10 marks)
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