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MAE - Inventory - Pratice Questions

This document contains 7 questions related to inventory control and calculating economic order quantity (EOQ) for various companies and products. The questions provide information on annual/monthly demand, ordering costs, carrying costs, purchase prices, consumption and other relevant details. Readers are asked to calculate reorder levels, minimum/maximum levels, average stock levels, EOQ, total annual ordering and carrying costs, number of deliveries/orders per year based on the information provided for each question.

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Dhairya Mudgal
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104 views2 pages

MAE - Inventory - Pratice Questions

This document contains 7 questions related to inventory control and calculating economic order quantity (EOQ) for various companies and products. The questions provide information on annual/monthly demand, ordering costs, carrying costs, purchase prices, consumption and other relevant details. Readers are asked to calculate reorder levels, minimum/maximum levels, average stock levels, EOQ, total annual ordering and carrying costs, number of deliveries/orders per year based on the information provided for each question.

Uploaded by

Dhairya Mudgal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Prof: Ankita Rohatgi Management Accounting for Engineers

INVENTORY CONTROL

Q1) Two components, A and B, are used as follows:


Normal usage 50 unit per week each
Minimum usage 25 units per week each
Maximum Usage 75 units per week each
Re-order quantity A : 300 units
B : 500 units
A : 4 to 6 weeks
B : 2 to 4 weeks
Calculate for each component :
a) Re-order level
b) Minimum level
c) Maximum level and
d) Average stock level
Q2) From the following information, calculate to Economic order quantity.
Semi-Annual Consumption 6,000 units
Purchase price of input unit ₹ 25
Ordering cost per order ₹ 45
Quarterly carrying Cost 3%
Q3) For the direct material A the following details are available:
Average inventory level 200
Orders per year 40
Average daily demand 48
Working days per year 250
Annual ordering costs ₹ 4,000
Annual carrying costs ₹ 6,000
Required :
Determine the annual demand, the cost of placing an order, the annual carrying cost of one
unit and the economic order quantity.
Q4) G Ltd. produce a product which has a monthly demand of 4,000 units. The product
requires a components X which is purchased at ₹ 20. For every finished product, one unit of
component is required. The ordering cost is ₹ 120 per order and the holding cost is 10% p.a.
you are required to calculate the Economic order quantity.
Q5) X Ltd. manufacture a special product ‘ZED’ and provides the following information:
Demand of ZED is 1,000 units per month
Semi-annual carrying cost – 6%
Raw Material required per unit of finishing product – 2 kg.
Ordering cost per order - ₹ 90
Purchase price of input unit - ₹ 25 per kg
Required : Calculate (a) Economic order quantity and (b) Total Annual Carrying and
Ordering Cost at that quantity.
Q6) The Complete Gardener is deciding on the economic order quantity for two brands of
lawn fertilizer. Super grow and Nature’s Own. The following information is collected.
Particulars Fertilizer
Super Grow Nature’s Own
Annual Demand 2,000 Bags 1,280 Bags
Relevant ordering cost per purchasing order ₹ 1,200 ₹ 1,400
Annual relevant carrying cost per bag ₹ 480 ₹ 560
Required :
i. Compute EOQ for Super Grow and Nature’s Own.
ii. For the EOQ, what is the sum of the total annual relevant ordering costs and total
annual relevant varying costs for Super Grow and Nature’s Own?
iii. For the EOQ, compute the number of deliveries per year for Super Grow and Nature’s
Own.
Q7) Sachin Ltd. furnishes the following information:
i. Consumption = 300 units per quarter
ii. Cost per unit ₹ 40
iii. Cost of processing an order ₹ 600
iv. Obsolescence 15% p.a.
v. Insurance of inventory 25% p.a.
Compute:
a) Economic Order Quantity
b) Number of order per year
c) Time between two consecutive orders
A supplier a discount of 5% on a purchase of 600 units. Should it be accepted?

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