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The market demand for PSG's product is 2 000 units per month. Sales are spread evenly throughout the year. The cost price of a unit is R10 each and PSG sells the product at R15 each. Expenditure associated with inventory is as follows: Ordering cost R25 per order 20 % per annum Interest rate Holding costs Delivery time Weekly demand 400 – 600 units R48 per unit 2 weeks to 4 weeks Required: Calculate the following: 3.1. Economic order quantity 3.2. Re-order point 3.3. Maximum inventory holding

The market demand for PSG's product is 2 000 units per month. Sales are spread evenly throughout the year. The cost price of a unit is R10 each and PSG sells the product at R15 each. Expenditure associated with inventory is as follows: Ordering cost R25 per order 20 % per annum Interest rate Holding costs Delivery time Weekly demand 400 – 600 units R48 per unit 2 weeks to 4 weeks Required: Calculate the following: 3.1. Economic order quantity 3.2. Re-order point 3.3. Maximum inventory holding

Practical Management Science
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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The market demand for PSG's product is 2 000 units per month. Sales are spread evenly throughout the year. The cost price of a unit is R10 each and PSG sells the product at R15 each. Expenditure associated with inventory is as follows: Ordering cost R25 per order 20 % per annum Interest rate Holding costs Delivery time Weekly demand 400 – 600 units R48 per unit 2 weeks to 4 weeks Required: Calculate the following: 3.1. Economic order quantity 3.2. Re-order point 3.3. Maximum inventory holding 3.4. Minimum inventory holding
Transcribed Image Text:The market demand for PSG's product is 2 000 units per month. Sales are spread evenly throughout the year. The cost price of a unit is R10 each and PSG sells the product at R15 each. Expenditure associated with inventory is as follows: Ordering cost R25 per order 20 % per annum Interest rate Holding costs Delivery time Weekly demand 400 – 600 units R48 per unit 2 weeks to 4 weeks Required: Calculate the following: 3.1. Economic order quantity 3.2. Re-order point 3.3. Maximum inventory holding 3.4. Minimum inventory holding
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