DS Chemicals uses 10 000 liters per month of X,Y,Z, which is an additive required to...

 

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DS Chemicals uses 10 000 liters per month of X,Y,Z, which is an additive required to neutralize the scent of one of their industrial products. DS chemicals currently purchases the XY+Z6 from a local supplier who charges R15-00 per liter of additive. Special transportation is required to transport the additive from the supplier to DS chemicals, therefore the cost of placing an order is rather high. For example, DS Chemical's placed 12 orders last year (from Jan-Dec 2018), and accounting records show that the annual cost of ordering was R24 000-00. Insurance, taxes, handling and pilferage are estimated to be approximately R8- 00 per liter. a) If DS Chemicals wants to minimise costs over the duration of the year, how many liters should be ordered each time an order is placed? Please state the value of each variable used in the equation, before calculating the final answer b) As noted, DS Chemicals currently places an order for 10 000 liters each time. What cost savings will DS Chemicals achieve by ordering the number of liters calculated above, instead of continuing with the current order policy? w [Note: If you were unable to calculate an order quantity in Question 3(a), use a value of 7800 liters to calculate the savings] DS Chemicals uses 10 000 liters per month of X,Y,Z, which is an additive required to neutralize the scent of one of their industrial products. DS chemicals currently purchases the XY+Z6 from a local supplier who charges R15-00 per liter of additive. Special transportation is required to transport the additive from the supplier to DS chemicals, therefore the cost of placing an order is rather high. For example, DS Chemical's placed 12 orders last year (from Jan-Dec 2018), and accounting records show that the annual cost of ordering was R24 000-00. Insurance, taxes, handling and pilferage are estimated to be approximately R8- 00 per liter. a) If DS Chemicals wants to minimise costs over the duration of the year, how many liters should be ordered each time an order is placed? Please state the value of each variable used in the equation, before calculating the final answer b) As noted, DS Chemicals currently places an order for 10 000 liters each time. What cost savings will DS Chemicals achieve by ordering the number of liters calculated above, instead of continuing with the current order policy? w [Note: If you were unable to calculate an order quantity in Question 3(a), use a value of 7800 liters to calculate the savings]