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QUESTION 1 The storekeeper of a tyre manufacturing company has to plan the firm's inventory...

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Accounting

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QUESTION 1 The storekeeper of a tyre manufacturing company has to plan the firm's inventory requirements for the valves used in the tyres. The monthly usage is 500 valves. The storekeeper has reported that the cost to keep one valve in the storeroom for one year is N$5. The valves are supplied by a firm in Angola which normally delivers the valves between one month and 2 months after the order was placed. The cost to place an order is N$150. The storekeeper has asked you to assist him in calculating some of the inventory levels. Required: Calculate the following inventory levels: a) Economic order quantity b) Re-order level (Re-order point) c) Minimum inventory level (Safety stock) d) Average inventory level e) Maximum inventory level f) Annual ordering cost g) Annual carrying cost

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