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Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.

Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.

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Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
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Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.
Transcribed Image Text:Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.
b. Determine how many orders that has to be placed in a year. с. Determine the inventory order point. d. Calculate the total costs of inventory for Manis Berhad if ordering at EOO. The supplier of Manis Berhad offers a 1% discount for any orders of 20,000 kg of rubber or more in one order. Evaluate whether it would be beneficial for the company to take the quantity discount offered by the supplier. Show all the relevant calculations. е. f. The Managing Director suggested that the stockholdings of the company should be reduced since the assembly department needed more space. He also suggested that the company should source supplies from many suppliers locally and overseas. Do you agree with his suggestion? Briefly explain your opinion.
Transcribed Image Text:b. Determine how many orders that has to be placed in a year. с. Determine the inventory order point. d. Calculate the total costs of inventory for Manis Berhad if ordering at EOO. The supplier of Manis Berhad offers a 1% discount for any orders of 20,000 kg of rubber or more in one order. Evaluate whether it would be beneficial for the company to take the quantity discount offered by the supplier. Show all the relevant calculations. е. f. The Managing Director suggested that the stockholdings of the company should be reduced since the assembly department needed more space. He also suggested that the company should source supplies from many suppliers locally and overseas. Do you agree with his suggestion? Briefly explain your opinion.
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