A national chain of tyre fitters (tiger wheel and tyres) stocksa popular tyre for which the following information isavailable. The company operates on 50-weeks a year andnormally operates from Monday to Friday only.Ordering Costs per orderNS175.50Holding Cost per unit3 % of unit costCost per tyreNS1 800Reorder quantity5 000Lead time12 to 16 daysMaximum usage175 tyres per dayMinimum usage90 tyres per dayAverage usage140 tyres per dayDetermine the average level of inventory

Formula: Average level of inventory = Minimum stock level + [ 0.5 x Reorder quantity ]

A national chain of tyre fitters (tiger wheel and tyres) stocks a popular tyre for which the following information is available. The company operates on 50-weeks a year and normally operates from Monday to Friday only. Ordering Costs per order N$175.50 Holding Cost per unit 3 % of unit cost Cost

A national chain of tyre fitters (tiger wheel and tyres) stocks a popular tyre for which the following information is available. The company operates on 50-weeks a year and normally operates from Monday to Friday only. Ordering Costs per order N$175.50 Holding Cost per unit 3 % of unit cost Cost

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A national chain of tyre fitters (tiger wheel and tyres) stocks
a popular tyre for which the following information is
available. The company operates on 50-weeks a year and
normally operates from Monday to Friday only.
Ordering Costs per order
NS175.50
Holding Cost per unit
3 % of unit cost
Cost per tyre
NS1 800
Reorder quantity
5 000
Lead time
12 to 16 days
Maximum usage
175 tyres per day
Minimum usage
90 tyres per day
Average usage
140 tyres per day
Determine the average level of inventory

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