Bidii Enterprises is located at Kariobangi Light Industries area in Nairobi. The company manufactures a product ‘comex’ which is used in the building industry. The main raw material used in the manufacture of ‘comex’ is material B4 2000. The following information relates to material B4 2000. Annual requirements : 144,000 units Ordering costs : Sh.12,500 per order Annual holding costs : 20% of the purchase price Purchase price per unit : Sh.500 Safety stock requirement : None Required: (i) The economic order quantity. (ii) The number of orders needed per year (iii) Total cost of ordering and holding material B4 2000 per year. ( b) A Company has provided the following data in respect of its major raw materials. Maximum Consumption 1,200 units Normal consumption 900 units Minimum consumption 600 units Lead time 4-6 weeks Re-order Quantity 6,000 units Required Reorder level Maximum stock level Minimum stock level
a) Bidii Enterprises is located at Kariobangi Light Industries area in Nairobi. The company manufactures a product ‘comex’ which is used in the building industry. The main raw material used in the manufacture of ‘comex’ is material B4 2000.
The following information relates to material B4 2000.
Annual requirements : 144,000 units
Ordering costs : Sh.12,500 per order
Annual holding costs : 20% of the purchase price
Purchase price per unit : Sh.500
Safety stock requirement : None
Required:
(i) The economic order quantity.
(ii) The number of orders needed per year
(iii) Total cost of ordering and holding material B4 2000 per year.
( b) A Company has provided the following data in respect of its major raw materials.
Maximum Consumption 1,200 units
Normal consumption 900 units
Minimum consumption 600 units
Lead time 4-6 weeks
Re-order Quantity 6,000 units
Required
Reorder level
Maximum stock level
Minimum stock level
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