A company uses Material M in the manufacture of its products. The order quantity of the...
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A company uses Material M in the manufacture of its products. The order quantity of the material is 1,000 kg. Average usage is 400 kg per week and a safety stock of 500 kg is kept. Lead time between order and receipt is two weeks. Receipts and issues of Material M over a three-week period were: Weekl: Day 1 Day 3 Day 5 Week2: Day 2 Balance b/f Issue Receipt Issue Issue Issue 900 400 1000 260 170 370 K10800 K12600 Day 4 Week3: Day 3 Required: Calculate in relation to Material M the: (a) re-order level; (b) total cost of the four issues in the three week period if the weighted average method is applied when each issue occurs; (c) cost of the stock remaining at the end of the three week period if the last-in first-out (LIFO) method is applied. A company uses Material M in the manufacture of its products. The order quantity of the material is 1,000 kg. Average usage is 400 kg per week and a safety stock of 500 kg is kept. Lead time between order and receipt is two weeks. Receipts and issues of Material M over a three-week period were: Weekl: Day 1 Day 3 Day 5 Week2: Day 2 Balance b/f Issue Receipt Issue Issue Issue 900 400 1000 260 170 370 K10800 K12600 Day 4 Week3: Day 3 Required: Calculate in relation to Material M the: (a) re-order level; (b) total cost of the four issues in the three week period if the weighted average method is applied when each issue occurs; (c) cost of the stock remaining at the end of the three week period if the last-in first-out (LIFO) method is applied.
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