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Question 1: When should inventory be ordered to avoid from stock shortage? Discuss with practical example. Same examples will be marked zero.
Question 2: From the book of records of Zaria Arts, it is found that the average daily requirement of 20 x 30 - 90 grams art paper are 100 reams, the maximum weekly requirements of art paper do not exceed 900 reams and minimum weekly requirements during any week of 6 working days are not likely to fall below 300 reams. The time required to receive supplies is 4 days with minimum time period of 3 days in normal situations. Company has to pay Rs. 10 every time an order is placed. Interest on average inventory is 5% with carrying cost of 7%. Company purchases one ream at Rs. 50. However, in case of emergency, it takes 2 days to receive supplies. Company requires 35000 reams on annual basis.
Required:
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