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The following information relates to inventory-relationship of M. Ltd; i)Annual purchase sh.1,080,000 ii)Purchase price per unit is sh.30. iii)Carrying cost is 15% of the purchase

The following information relates to inventory-relationship of M. Ltd;

i)Annual purchase sh.1,080,000

ii)Purchase price per unit is sh.30.

iii)Carrying cost is 15% of the purchase price per unit.

iv)Cost per order placed is sh.120.

v)Desired stock level is 1500 units.This stock level was in hand initially.

vi)Lead time is 7 days.

i) Compute the economic order quantity.(2 Marks)

ii) What is optimal number of orders to be placed in the year? (2 Marks)

iii) Assuming 52 weeks in a year, determine the inventory conversion period

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