An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeks Maximum delivery time: 3.5 weeks Normal usage: 52 000 units per year Purchase price per unit: R8.50 Cost of placing an order: R18.00 Interest rate: 2% per year Storing cost per unit: R2.50 a). Calculate the safety stock b). Calculate the lead time
An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeks Maximum delivery time: 3.5 weeks Normal usage: 52 000 units per year Purchase price per unit: R8.50 Cost of placing an order: R18.00 Interest rate: 2% per year Storing cost per unit: R2.50 a). Calculate the safety stock b). Calculate the lead time
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 15E
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An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you:
Normal delivery time: 2.5 weeks
Maximum delivery time: 3.5 weeks
Normal usage: 52 000 units per year
Purchase price per unit: R8.50
Cost of placing an order: R18.00
Interest rate: 2% per year
Storing cost per unit: R2.50
a). Calculate the safety stock
b). Calculate the lead time
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