Day Reserve Question Materials.doc - Day 2 \u2013 Questions on Direct Materials Question 1 Atlas Limited is reviewing its Inventory control policy with

Day Reserve Question Materials.doc - Day 2 u2013 Questions...

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Day 2 – Questions on Direct Materials Question 1 Atlas Limited is reviewing its Inventory control policy with regard to material Y. You are told that the cost of an order is £10, the cost of holding one kilo for one year is 25p. The annual demand for material Y is 80,000 kgs. There is no lead-time, nor buffer Inventory. Required Determine the following for material Y: 1) The Economic Order Quantity using the tabular method and Formula. The table should be constructed in multiple of 500 units between 1000 and 300o units 2) The number of orders per year. 3) Daily usage (assume Atlas operates on 50 weeks in the year, 5 days a week). Question 2 You are given the following information with respect to product EZ301. - Average budgeted demand for the material KL, from which the product is made, is 400 kgs per week. - The re-order costs is £12.50 per order - The standard material cost of KL is £6 per kg. - The cost of holding this stock is one third of the purchase cost - The maximum usage in any one week is 600 kgs and the minimum is 300 kgs.
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