The production department of a company requires 3,600 kg of raw material for manufacturing a particular item per year. It has been estimated that the cost of placing an order is Rs 36 and the cost of carrying inventory is 25 per cent of the investment in the inventories. The price is Rs 10 per kg. Help the purchase manager to determine: (1) The optimal lot size. (ii) The optimal order cycle time Per year minimum total inventory variable cost Per year minimum total inventory cost (iii) (iv)

The production department of a company requires 3,600 kg of raw material for manufacturing a particular item per year. It has been estimated that the cost of placing an order is Rs 36 and the cost of carrying inventory is 25 per cent of the investment in the inventories. The price is Rs 10 per kg. Help the purchase manager to determine: (1) The optimal lot size. (ii) The optimal order cycle time Per year minimum total inventory variable cost Per year minimum total inventory cost (iii) (iv)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

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