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Please can you help me with question 3 of the tests in inventory control:
Sky Limited wishes to minimise its inventory costs. At the moment its reorder quantity is 1,000 units. Order
costs are $10 per order and holding costs are $0.10 per unit per month. Sky Limited estimates annual demand
to be 15,000 units.
What is the optimal reorder quantity (to the nearest 100 units)?
A 500 units
B 1,000 units
C 1,200 units
D 1,700 unitsthe answer given is A 500 units and they have worked out the EOQ where they have divided the annual demand of 15000 by 12 and used the monthly demand to calculate the EOQ. why has the demand been divided by 12 when we always use the annual demand?
It doesn’t matter whether you use annual demand and annual holding cost; or monthly demand and monthly holding cost.
Use the annual demand (15,000) and the annual holding cost (12 x $0.10) and you will get exactly the same answer 🙂
Thank you so much sir. I didn’t realise that the holding cost was monthly. I keep missing key points in the question. I always tell myself that I need to read the question carefully but keep making the same mistake! Thank you very much. And I must thank you for the wonderful work that you are doing. Your lectures are so good. It really helps me to understand the topics. I passed my f1 and f3 exam with 83 and 77 respectively all thanks to you.
May god bless youHello sir can you please tell me the answer to this question.
Which of the following are characteristics of a good employee reward system?
Fairness
Understandable
Consistent
Objective1 only
1 & 2
1,2 and 4
All of the aboveI would say 1, 2 and 4.
(I would not include consistent because a good reward system should be flexible depending on what employees do)Even I was thinking that should be the answer but in kaplans text book they have listed consistent as well and I dont understand why because even the same employee will not get the same reward everytime. Its a bit confusing.
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