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Which of the following are possible consequences of a failure to control the ordering and receipt of materials? a) Incorrect materials being delivered, disrupting operations

Which of the following are possible consequences of a failure to control the ordering and receipt of materials? a) Incorrect materials being delivered, disrupting operations b) Incorrect prices being paid c) Deliveries other than at the specified time (causing disruption) d) Insufficient control over quality e) Invoiced amounts differing from quantities of goods received or prices agreed. 2 In the context of inventory management, differentiate between the following: a) Bin card and stores ledger account b) Periodic and continuous stocktaking c) Which is better, periodic and continuous stocktaking? 3 What is the Perpetual Inventory System? 4 An audit of the stocks in your organization shows many discrepancies between the actual quantities counted and the quantities on record. State the possible causes of these differences from the receipt of items to the eventual despatch of finished products. 5 You are given the following information: Physical Stock balance Quantities on outstanding purchase orders Quantities on outstanding requisitions Required (a) Calculate the Free Stock Balance 1800 units 2700 units 900 units (b) What role does the free stock balance play in inventory management? 6 You are given the following information Physical Stock balance Quantities on outstanding purchase orders Quantities on outstanding requisitions Required % of the Free Stock Balance 2700 units 900 units (a) Calculate the physical and free stock balance 7 You are given the following information Physical Stock balance Quantities on outstanding purchase orders Quantities on outstanding requisitions Required (a) Calculate the Free Stock Balance 10,000 units 4,000 units 600 units (b) What role does the free stock balance play in inventory management? 8 You are given the following information Physical Stock balance Quantities on outstanding purchase orders Quantities on outstanding requisitions 1/5 of the Free Stock Balance 40,000 units 5,000 units (a) Calculate the physical and free stock balance 2 9 Define lead-time, buffer stock and re-order level. 10 What assumptions are made when using the Economic Order Quantity (EOQ) decision model? 11 You are given the following information EOQ Minimum Usage 4000 units 300 units 6 times the reorder level Minimum Lead Time 5 days Maximum Level Calculate the maximum level. 12 The following data relates to an item of raw material Value of Raw Material $64 Consumption per day 250 units Minimum lead time 20 days Maximum lead time Order cost for material Carrying costs 30 days $720 per order 10% p.a. of unit cost Assume that each year has 360 days Required: Calculate the (a) EOQ (b) Minimum level (b) Re-order level (d) Maximum level 3

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