Question 1: Medical Aids Corporation manufactures a special product ‘A’. The given particulars were collected for the year 1991:
a) Monthly demand of ‘A’ 1,000 units
b) Cost of placing an order Rs. 100
c) Annual carrying cost per unit Rs. 15
d) Normal usage 50 units per week.
e) Minimum usage 25 units per week
f) Maximum usage 75 units per week
g) Re-order period 4 to 6 weeks
Calculate from the above:
A) Re-order Quantity
B) Re-order level
C) Minimum Level
D) Maximum Level
E) Average Stock-Level.
Question 2: Pumpkin Pump Corporation uses around 75,000 values per year and the usage is quite constant at 6,250 values per month. The values cost Rs. 1.50 per unit when bought in quantities and the carrying cost is estimated to be around 20% of average inventory investment on the annual basis. The cost to place an order and method the delivery is Rs. 18. It takes 45 days to receive delivery from the date of an order and a safety stock of 3,200 values is desired.
You are required to find out:
a) The most economical order quantity and frequency of orders
b) The order point
c) Describe the problems that most of the firms would have in attempting to apply the economic order quantity (EOQ) formula to their inventory problems.
Question 3: A manufacturer who has recently set up the factory used cost price as the basis for charging out materials to jobs. The receipts side of stores ledger account exhibits the given particularly:
500 articles bought at Rs. 3.00 each
700 articles bought at Rs. 3.10 each
400 articles bought at Rs. 3.20 each
800 articles bought at Rs. 3.10 each
Successive issues were made of 300, 1,000 and 200 articles.
a) At what price per article must each of these issues be charged under the FIFO Method?
b) Describe in brief the various methods of charging out the materials issued to job.