Question 2 Phyllis Limited produces a product called SOMUAH The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GHC 250 and each kilogram costs GHC 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material Required: Calculate the following: a) The Economic Order Quantity (EOQ) (4 marks) b) Annual Inventory Cost (3 marks)
Question 2 Phyllis Limited produces a product called SOMUAH The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GHC 250 and each kilogram costs GHC 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material Required: Calculate the following: a) The Economic Order Quantity (EOQ) (4 marks) b) Annual Inventory Cost (3 marks)
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 2
Phyllis Limited produces a product called SOMUAH The manufacture of this product requires
raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per
order is GHC 250 and each kilogram costs GHC 25.00. Annual holding cost is estimated at 20%
of the cost of a kilogram of material
Required: Calculate the following:
a) The Economic Order Quantity (EOQ)
(4 marks)
b) Annual Inventory Cost
(3 marks)
(Totals-7marks)
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