Storage Limited operates a 50-week working year. It produces a product called 'GENERAL' for which demand...

 

Transcribed Image Text:

Storage Limited operates a 50-week working year. It produces a product called 'GENERAL' for which demand any week in the year is described by the probability distribution below: Demand 0 1 2 3 4 5 Probability 0.07 0.10 0.11 0.13 0.15 0.17 6 7 8 9 0.13 0.08 0.04 0.02 Demand can only be satisfied (if at all) from stocks. The stockholding costs are per item per year. Fixed costs per re-order are N16 and the variable, re-order costs are N30 per unit Lead time is one week. The costs of being out of stock are 12 per unit short. You are required to calculate: [i] The average weekly demand; (2 marks) [ii The average annual demand; (2 marks) [iii] The Economic Order Quantity; (2 marks) [iv] The number of ordering cycles in the year; and (2 marks) [v] State briefly the main reason for holding inventory, and explain why good inventory management is a very important aspect of overall company management. (2 marks) Storage Limited operates a 50-week working year. It produces a product called 'GENERAL' for which demand any week in the year is described by the probability distribution below: Demand 0 1 2 3 4 5 Probability 0.07 0.10 0.11 0.13 0.15 0.17 6 7 8 9 0.13 0.08 0.04 0.02 Demand can only be satisfied (if at all) from stocks. The stockholding costs are per item per year. Fixed costs per re-order are N16 and the variable, re-order costs are N30 per unit Lead time is one week. The costs of being out of stock are 12 per unit short. You are required to calculate: [i] The average weekly demand; (2 marks) [ii The average annual demand; (2 marks) [iii] The Economic Order Quantity; (2 marks) [iv] The number of ordering cycles in the year; and (2 marks) [v] State briefly the main reason for holding inventory, and explain why good inventory management is a very important aspect of overall company management. (2 marks)

Answer rating: 100% (QA)

EFN Sales x Growth Rate x Payout Ratio Interest on LT Debt EFN 5000 x 115 x 050 150 EFN 3825 150 EFN ... View the full answer