Nitrogen Chemicals is considering the optimal batch size for the reorder of concentrated sulphuric acid. The management accountant has supplied the following information: • The purchase price of H2 SO4 is K150 per gallon • The clerical and data processing costs are K500 per order. All the transport is done by rail. A charge of K2000 is made each time the special line to the factory is opened. A charge of K20 per gallon is also made. The company uses
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Nitrogen Chemicals is considering the optimal batch size for the reorder of concentrated sulphuric acid. The management accountant has supplied the following information:
• The purchase price of H2 SO4 is K150 per gallon
• The clerical and data
All the transport is done by rail. A charge of K2000 is made each time the special line to the factory is opened. A charge of K20 per gallon is also made. The company uses 40,000 gallons per year. Maintenance costs of stocks are K200 per gallon per year.
Each gallon requires 0.5 square metres of storage space. If warehouse space is not used, it can be rented out to another company at K200 per square metre per annum. Available warehouse space is 1000 square metres, the overhead costs being K5000 per annum. Calculate:
- The most economical batch size
- The number of production runs to be made
The total cost of stocking sulphuric acid per annum
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Why aren't we using the overhead costs and the extra charges as part of the holding cost per unit and ordering cost per order respectively???
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