Surekha Limited produces 4,000 Litres of paints on a quarterly basis. Each Litre requires 2 kg of
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Surekha Limited produces 4,000 Litres of paints on a quarterly basis. Each Litre requires 2 kg of raw material. The cost of placing one order for raw material is ` 40 and the purchasing price of raw material is ` 50 per kg. The storage cost and interest cost is 2% and 6% per annum respectively. The lead time for procurement of raw material is 15 days.
Calculate Economic Order Quantity and Total Annual Inventory Cost in respect of the above raw material.
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Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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