QUESTION The following information regarding Tekla LTD 6 weeks 2 weeks Maximum lead time Minimum lead time Masimum usage Minimum usage Purchase priceperunt Average annual storage cost per unit Cost to place an order Prime interest rate Production works per annum Stockfinancing is by overdratt 8 000 units per month 2000 units per month N550.00 N52.20 N$120.00 1150 NB: (assume 4 weeks are equivalent to 1 month REQUIRED 1 Re-order stock level 2 Minimum stock level 3. Economic order quantity 4 Average stock level 5. Order cost per annum 14 16 14) Question 1 MY & Mr X run a small practice as manufacturers and need some advice from you as a Cost & Management Accountant You are presented with the following information it takes them two to four months to receive the raw materials from their suppliers. The firm requires 300 units per month at most but normally use 150 units per month. At least 50 units should always remain in the warehouse at all times. Normally they require 1 800 units for their financial period. It costs them $2.00 each time they arder and pay N$0.32 per unit of materials. They rent a warehouse and they are charged a 25% inventory value per annum Required 11 At what point should the inventory be replenished? 2 marks 12 How many units would they order each? 3 marks 13 What would be the annual holding cost? 7 marke 14 What would be the annual ordering cost? marks 1s What would be the cost of purchasing the inventory for the year? QUESTION 2 (27 mars Tau-Tau lod supplied the following information regarding a particular product in inventory Maximum lead time Minimum lead time Interest rate Cost price per unit N$20 Ordering cost N$26,52 per order Maximum weekly 3300 units Minimum weekly 3000 units Carrying holding cout N52/unit/year excluding the cost of capital Beared Calculate the following inventory levels 2.1 Economic order quantity 2.2 Number of orders to be placed per year 12) 2.3 Re-order level Re-order point) 023 24 Minimum inventory level Safety stock) 2.5 Average inventory 2.6 Maximum inventory 121 QUESTION 1 The following information regarding Tekla LTD Maximum lead time Minimum lead time Maximum usage Minimum usage Purchase price per unit Average annual storage cost per unit Cost to place an order Prime interest rate Production weeks per annum Stock financing is by overdraft 6 weeks 2 weeks 8 000 units per month 4000 units per month N$50.00 N$2.20 N$120.00 11.50% 48 NB: (assume 4 weeks are equivalent to 1 month) REQUIRED: 1. Re-order stock level 2. Minimum stock level 3. Economic order quantity 4. Average stock level 5. Order cost per annum (4) (4) (4) (4) (4) Question 1 15 marks MrY & Mr X run a small practice as manufacturers and need some advice from you as a Cost & Management Accountant You are presented with the following information: it takes them two to four months to receive the raw materials from their suppliers. The firm requires 300 units per month at most; but normally uses 150 units per month. At least 50 units should always remain in the warehouse at all times. Normally they require 1 800 units for their financial period. It costs them N$2.00 each time they order and pay N$0.32 per unit of materials. They rent a warehouse and they are charged a 25% on inventory value per annum. Required: 1.1 At what point should the inventory be replenished? 2 marks 1.2 How many units would they order each? 3 marks 1.3 What would be the annual holding cost? 7 marks 1.4 What would be the annual ordering cost? 2 marks 1.5 What would be the cost of purchasing the inventory for the year? 1 mark QUESTION 2 (17 marts) Tau-Tau Ltd supplied the following information regarding a particular product in inventory: Maximum lead time 5 weeks Minimum lead time 2 weeks Interest rate 5%p.a. Cost price per unit N$20 Ordering cost N$26,52 per order Maximum weekly usage 3 800 units Minimum weekly usage 3 000 units Carrying (holding) cost N$2/unit/year (excluding the cost of capital) Required: Calculate the following inventory levels: 2.1 Economic order quantity (5) Number of orders to be placed per year (2) Re-order level (Re-order point) (2) Minimum inventory level (Safety stock) (3) Average inventory (3) Maximum inventory (2) 2.2 2.3 2.4 2.5 2.6
