WORKING CAPITAL MANAGEMENT:

(20 MARKS)

Exciting Acrylics buys a standard type of acrylic paint known as Supreme Star Acrylic in 50 litre containers at a price of R800 per container and 19 200 of these containers are used each year. The stock controller estimates that the cost of placing and receiving an order is R450. The annual cost of carrying the product is R6 per container. If the company was to order 800 containers per order placed during the year:

a. Calculate the number of orders made during the year. [4]

b. Calculate the annual ordering costs. [4]

c. Calculate the annual holding costs. [4]

d. Calculate the total annual cost of inventory. [4]

e. Briefly explain the four main categories of quality costs. [4]