QUESTION ONE

$[20]$

A salon shampoo supplier presents the following data in respect of their purchases:

Annual demand

$200000$

units

Maximum daily requirement

$1500$

units

Average daily requirement

$1050$

units

Carrying cost

R $1,50$ per

unit

Ordering cost

R $40$ per

order

Lead time

$12$

days

Time needed to acquire emergency supplies

$3$ days

NB: Assume that sales are even throughout the year.

$1\mathrm{.}1\mathrm{.}1$ Determine the economic order quantity $($EOQ$).$

$1\mathrm{.}1\mathrm{.}2$ Determine the ordering point.

$1\mathrm{.}1\mathrm{.}3$ Calculate the danger level.

$1\mathrm{.}1\mathrm{.}4$ Discuss the assumptions made by the EOQ model.