Sie sind auf Seite 1von 4

# www.vutube.edu.

pk
Cost & Management Accounting (Mgt-402) Solution Assignment 02

## Annual requirement of XY-9 12,000 Units

Variable cost to place an order Rs. 10
Unit Cost of XY-9 Rs. 4.80
Carrying Cost 5%

Required:

## a) Calculate EOQ from the data given above

b) Calculate after how many days an order shall be placed

Part A:

## EOQ = √ 2 X 12,000 X 10 / 0.24

EOQ = √ 240,000/0.24

EOQ = √1,000,000

## EOQ = 1,000 units

Part B:

Annual
No. of Ordering Ave. Carrying Total
Requirement Order Size
Orders (1) Cost Inventory Cost cost
s
12,000 Units 800 units Rs. 15 Rs. 150 400 units Rs. 96 Rs. 246
12,000 Units 1,000 units Rs. 12 Rs. 120 500 units Rs. 120 Rs. 240

## Virtual University of Pakistan 1

www.vutube.edu.pk
Cost & Management Accounting (Mgt-402) Solution Assignment 02

## Summer Session 2007

12,000 Units 1,200 Units Rs. 10 Rs. 100 600 units Rs. 144 Rs. 244

## 1. Ordering Cost @ Rs. 10 per order

2. Average Inventory = EOQ/2
3. Carrying Cost @ Rs. 0.24 per unit (i.e. Rs. 4.80 X 5%)

## = 365 days / number of orders

= 365 days / 12 orders
= 30.41 or 30 days

## Virtual University of Pakistan 2

www.vutube.edu.pk
Cost & Management Accounting (Mgt-402) Solution Assignment 02

## Maximum daily consumption 600 Units

Average daily consumption 500 Units
Minimum daily consumption 400 Units

A B
Lead Time 4-8 days 3-5 days
Lead Time to get urgent supplies 3 days 1 day
5000
EOQ units 3000 units

a) Order Level
b) Minimum level
c) Maximum level
d) Danger level

Solution

## Material A = 600 units x 8 days = 4800 units

Material B = 600 units x 5 days = 3000 units

## Material A = 4800 units – (500 units x [4+8]/2 days) = 1800 units

Material B = 3000 units – (500 units x [3+5]/2 days) = 1000 units

Maximum Level = Order level – (Min. consumption during lead time) + EOQ

Material A = 4,800 units – (400 units X 4 days) + 5,000 units = 8,200 units
Material B = 3,000 units – (400 units X 3 days) + 3,000 units = 4,800 units

## Virtual University of Pakistan 3

www.vutube.edu.pk
Cost & Management Accounting (Mgt-402) Solution Assignment 02

## Summer Session 2007

Danger Level = Average consumption during lead time for urgent supplies

## Material A = 500 units X 3 days = 1,500 units

Material B = 500 units X 1 days = 500 units