QUESTION FOR REVISION $$ MSP$530$

TT Mining Services is an explosives manufacturing company based on the

Copperbelt town of Chambishi. The company produces and supplies explosives to

the mines based on the Copperbelt and North Western Provinces. One raw material

$$ ammonium nitrate $($AN$)$ is purchased in large quantities from China. It is used in

the production of explosives called ANFO. Two Thousand Five Hundred $(2,500)$ tons

of AN are forecasted to be required next year $(2025)$ to support production. If AN

cost K$122\mathrm{.}50$ per ton, carrying cost is $35\%$ of acquisition cost $($ac$),$ and ordering cost

is K$1,595\mathrm{.}00$ per order.

REQUIRED:

$($A$)$ In what quantities should TT Mining Services procure ammonium nitrate?

$[10$ Marks$]$

$($B$)$ What annual stocking costs will be incurred if ammonium nitrate is ordered at

EOQ? $[15$ Marks$]$

$($C$)$ How many orders per year must TT Mining Services place for ammonium

nitrate?

$[10$ Marks$]$

$($D$)$ How much time will elapse between orders? $[5$ Marks$]$