REQUIRED

Use the information given below to calculate the:

$2\mathrm{.}2\mathrm{.}1$ Quantity that should be ordered each time that will keep the both the costs associated

with purchasing and the cost of holding inventory as low as possible. $(3$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Re$-$order point. $(3$ marks$)$

INFORMATION

The annual sales of a product sold by Umhlali Limited is $3600000$ units. The purchase price is R$12$ per unit.

The carrying cost of inventory amounts to $25\%$ of the purchase price. The ordering cost is R$12$ per order. It

takes the suppliers $10$ days to execute an order. Assume that the business operates for $240$ days in a year.