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a. When should inventory be ordered to avoid from stock shortage? Discuss with practical example. Same examples will be marked zero. b. From the book of records of Zaria Arts, it is found that the average daily requirement of 20 x 30 - 90 grams art paper are 100 reams, the maximum weekly requirements of art paper do not exceed 900 reams and minimum weekly requirements during any week of 6 working days are not likely to fall below 300 reams. The time required to receive supplies is 4 days with minimum time period of 3 days in normal situations. Company has to pay Rs. 10 every time an order is placed. Interest on average inventory is 5% with carrying cost of 7%. Company purchases one ream at Rs. 50. However, in case of emergency, it takes 2 days to receive supplies. Company requires 35000 reams on annual basis. Required: Calculate maximum and minimum levels, average maximum level and danger level. Question No 4 (8 marks) GH Bros. is engaged in manufacturing cosmetic products and prepared the following information as a basis for its 2019 Budget. Products Expected sales Sale price per Per unit material required for use in unit production of units sold Material A Material B X 160000 units Rs. 250 1 kg 2 kg Y 80000 units 150 2 kg 1.5 kg Z 200000 units 100 0.5 kg NIL Estimated inventories at the beginning and desired quantities at the end of 2019 are: Material Beginning Ending Price per kg (same price for material required for use in production) A 20000 kg 24000 kg Rs. 40 B 24000 kg 30000 kg 20 Products Beginning Ending X 10000 units 12000 units Y 8000 units 4000 units Z 20000 units 16000 units Sales information according to cities X Y Z Rawalpindi 20% 40% 50% Islamabad 50% 40% 20% Lahore 30% 10% Remaining Required: Prepare sales budget, production budget, also calculate cost of raw material purchased by preparing raw material budget