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1. COVID-19 Ltd produces a specialized product; LOCKDOWN which has a constant monthly demand of 4000...

1. COVID-19 Ltd produces a specialized product; LOCKDOWN which has a constant monthly demand of 4000 units. The LOCKDOWN requires a component which COVID-19 Ltd purchases from a supplier at GHS10 per unit. The component requires a three-day lead time from the date of order to the date of delivery. The ordering cost is GHS0.60 per order and the holiday cost is 10% per annum.

Required to:

  1. Calculate
  1. The economic order quantity.                                                              
  2. The number of orders required per year.                                              (7 mark)
  3. The total cost of ordering and holding the components for the year.    (7 mark)
  1. Assuming that there is no safety stock and that the present stock level is 400 components, when should the next order be placed? (Assume a 360-day year.) (7 mark)

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ekkarill92 answered 1 year ago
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