Mock exam :working capital

Hi, I am really bored at this hour, so I am gonna attempt this :P,

So there is a lead time of 30 days meaning u will place an order whenever “30 days worth of inventory is left”

Now 1 months demand is 7500 so total demand in a year is 7500 x 12 = 90,000 units

Therefore, if 90,000 units represent 365 days worth of Inventory, how many units will 30 days of inventory represent ?? that is:

90,000 – 365

X – 30

therefore X = 90,000 x 30 / 365 = 7,397 units

now to the nearest days:

so whenever 7397 units, a new order is placed all for a total of 90,000 units in a year

so how many orders that is = 90,000 / 7397 = 12.167 orders

now, 365 days & 12.167 orders in a year, after how many days will they place an order,

that is 365 / 12.167 = 29.99 = 30 days

so after every 30 days, with an inventory level of 7397, they place a new order which will arrive in the next 30 days and so on….

I may be wrong, but i knw the answer is in these above figures somewhere :P,

And why EOQ is mentioned here, I dont know because with EOQ:

EOQ = Root of [2 x 100 x (7500 x 12) / (10% of 5)]

EOQ = 6000 units every time

now if 90,000 units represent 365 days worth, then how much will 6000 represent,

so 365 x 6000 / 90000 = 24.33 days worth

if 6000 will last for 24.33 days and we have to order 30 days before depleting our stock then, we are ordering for our next stock even before our current stock has arrived…

so either this question is set up by Chuck Norris

OR

a Transformer,

which 1 is it ?? where u find such a question, im curious 😛

I do not know why Bill the Butcher has written so much.

The EOQ is 6,000.

The total demand is 90,000.

So 15 orders a year.

So order every 365/15 days.

There is no problem whatsoever ordering before the current order has arrived!!

The question is in our F9 multiple choice test.