Section C:
[26 Marks]
Question 6: Economic Order Quantity
(17)
Kavango Spares Centre sells 33 000 cans of Premium Oil per year. The holding costs
are estimated to be N$ 5.50 per can and the costs of placing an order amount to N$
8 per order.
The business is open for 320 days per year.
Determine:
i. the optimal economic order quantity (EOQ)
(3)
ii. the number of orders per year
(2)
iii. the length of the ordering cycle
(3)
iv. the total annual inventory costs
(4)
v. if the demand for Premium Oil decreases to 30 000 cans per year and ordering
cost increases to 8.5, what will be the effect on the total annual inventory costs?
(5)
Question 7: Capacity Planning
(9)
Smarts Elementary School opened its doors in January 2022. Being a private school, it
wanted to have the best teacher - learner ratio. The facilities were designed to
accommodate 275 learners. Due to some challenges, they found that their effective
capacity is 230 learners. As a result of the current economic conditions, their
enrolment was 205 learners. Each teacher marks 18 tests in one hour. There are
currently 8 tests to still be marked.
Determine:
i. Efficiency
(3)
ii. utilisation of the school facilities
(3)
iii. The load (in minutes), given the backlog of 8 scripts
(3)
-END-
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