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# MGT402 ASSIGNMENT no 1 last date 29/11/16

Star Electronics Limited (SEL) is a small manufacturer of home electronic items. For its production cycle, during last quarter of the year 2016, the company’s management accountant reveals following information:

 Average Weekly Consumption in Units 3,500 - 9,000 Annual Consumption in Units 500,000 Per order cost (Rs.) 12,500 Per unit cost (Rs.) 40 Carrying cost (% of Unit cost) 12.5 Time to receive delivery in weeks 10 - 13 Emergency lead time in weeks 5

Using the above information, compute following levels for the said quarter: 1. EconomicOrderQuantity(EOQ)
2. Re-orderstock
3. MaximumStock

4. MinimumStock

5. DangerStock

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### Replies to This Discussion

mughal bhai puri solution file post kro

How to find reorder level

abdul ghaffar answer right...students should read lecture 8  practice question1 for 2 3 4 5 points on pages 52 53 and for EOQ read lecture 9  page 56 n mine solution here

1.Economic Order Quantity (EOQ)=[2*500000*12500)/(40*12.5%)]^1/2

=50,000 units here 40*12.5% means 5

2.Re-order stock=Maximum consumption *Lead time (maximum)

=9000*13

=117000 units

3 .Maximum stock

Maximum stock= Reorder level – (Minimum consumption x Lead time [minimum]) + EOQ

=117000-(3500*10)+50000

=132000 units

4. Minimum stock

Minimum stock= Reorder level – (Average consumption x lead time [Average])

=117000-(5500*11.5)

=117000-63250

=53750 units

Working: on page 53...average consumption =75-25=50 so

Average consumption= maximum consumption-minimum Consumption

=9000-3500

=5500units

Average lead time = (Maximum + Minimum)/2

=( 13+ 10)/2

=11.5 weeks

5. Danger stock

Danger stock=Average consumption*Emergency time

=5500*5

=27500 units

Remember me in ur prayers

matched but Maximum level is 132000 units
average consumption = (maximum consumption + minimum consumption)/2
= 3500 + 9000 / 2
= 6250

AVERAGE IS NOT ONLY MEAN ..IT CAN ALSO BE RANGE...DID U READ BUSINESS MATHEMATICS OR STATISTICS?

when we want to knw average consumption for any month thn it will be stock at end of month minus stock in beginning of month

average stock = max stock-minimum stock=stock at end of month -stock of starting month

okay lets wait for instructor's solution........

MGT402 Assignment#01 Solution

Attachments:

1. Economic Order Quantity (EOQ)
EOQ =    5000

5. Danger Stock level
= 31250

Minimum Stock level
= 15125

Another idea files

Attachments:

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