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Hi john sir, hope u r best in health also i also pray for that:
Q.1 # Is there any difference between efficiency and productivity ratio?
Q2 # Is it mandatory that to find out E.O.Q or E.B.Q demand should be annual? can it not be for some other period like for 1 month or 2 year etc.?
Q3 # when we purchase material then we inccur some expenses on purchase like transpotation and duties etc. But when we purchase then we may have to return some thing and i know that return is deducted from purchases to find out net purchase. My question is if there expenses are also incurred on returns then what should we do with these expenses?
Please john sir guide me for above questions even 1 by 1 as you may have time limitation.
Waiting for your usual cooperation with every student.
Q1 – yes there is a difference. See the chapter in the course notes on labour. Efficiency measure how fast people work; productivity measures how we produce – producing less may be due to being less efficient, but it could also be due to having fewer people.
Q2 No – it does not have to be annual. However if you use another period (say 3 months) then it is important to make sure that you are also using the cost of holding inventory for just 3 months instead of for a year. It is however always easier to do everything annually.
(Obviously the final answer will be the same for the EOQ/EBQ whatever the time period used)Q3 These expenses would be added to the cost of production (although I would be astonished if that was relevant for the exam).
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