Kroton Motor Parts Sdn. Bhd. purchased a raw material named Kroton, from an outside supplier at a cost RM960 per dozen. The company uses the economic order quantity (EOQ) model to establish the re-order quantity for Kroton. The company holds no buffer stock. The management is always concerned of stock-out costs, that are the costs associated with running out of stock. Monthly usage of the item is 4,000 units, and the following information is available. Clerical, stationery, postage, telephone and transport cost per order Required annual return on investment in stocks Other holding costs per unit RM120 6% per annum RM3.20 Required: a. Calculate the annual demand in units. b. Calculate the annual cost of purchasing for raw material Kroton. c. Calculate the economic order quantity (to the nearest unit) for raw material Kroton. d. Calculate the number of order per year the company will place for Kroton.
Kroton Motor Parts Sdn. Bhd. purchased a raw material named Kroton, from an outside supplier at a cost RM960 per dozen. The company uses the economic order quantity (EOQ) model to establish the re-order quantity for Kroton. The company holds no buffer stock. The management is always concerned of stock-out costs, that are the costs associated with running out of stock. Monthly usage of the item is 4,000 units, and the following information is available. Clerical, stationery, postage, telephone and transport cost per order Required annual return on investment in stocks Other holding costs per unit RM120 6% per annum RM3.20 Required: a. Calculate the annual demand in units. b. Calculate the annual cost of purchasing for raw material Kroton. c. Calculate the economic order quantity (to the nearest unit) for raw material Kroton. d. Calculate the number of order per year the company will place for Kroton.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:Kroton Motor Parts Sdn. Bhd. purchased a raw material named Kroton, from an outside supplier
at a cost RM960 per dozen. The company uses the economic order quantity (EOQ) model to
establish the re-order quantity for Kroton. The company holds no buffer stock. The management
is always concerned of stock-out costs, that are the costs associated with running out of stock.
Monthly usage of the item is 4,000 units, and the following information is available.
Clerical, stationery, postage, telephone and transport cost per order
Required annual return on investment in stocks
Other holding costs per unit
RM120
6% per annum
RM3.20
Required:
a. Calculate the annual demand in units.
b. Calculate the annual cost of purchasing for raw material Kroton.
c. Calculate the economic order quantity (to the nearest unit) for raw material Kroton.
d. Calculate the number of order per year the company will place for Kroton.
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