The purchase committee of A Ltd . has been entrusted to review the material procurement policy of
Question:
The purchase committee of A Ltd has been entrusted to review the
material procurement policy of the company. The chief marketing
manager has appraised the committee that the company at present
produces a single product by using two raw materials A and in the
ratio of : Material is perishable in nature and has to be used within
days from Goods received note GRN date otherwise material
becomes obsolete. Material is durable in nature and can be used even
after one year. Material is purchased from the local market within to
days of placing order. Material on the other hand, is purchased from
neighbouring state and it takes to days to receive the material in the
store.
The purchase price of per kilogram of raw material A and is and
respectively exclusive of taxes. To place an order, the company has
to incur an administrative cost of Carrying cost for Material
and B is and respectively. At present material A is purchased in
a lot of to avail discount on market price. GST applicable
for both the materials is and the input tax credit is availed.
The sales department has provided an estimate that the company could
sell in January and also projected the same trend for the
entire year.
You are required to Calculate
For the month of January what would be the quantity of the material to be requisitioned for both material A and B
The Economic order quantityEOQ for material A and B
What would be the maximum stock level of A
Calculate savingloss in purchase of material A if the Purchase order Quantity is equal to EOQ?
Numerical Methods for Engineers
ISBN: 9780071244299
5th Edition
Authors: Steven C. Chapra, Raymond P. Canale