Homework Answers
we know that
capital is the cost incurred to maintain the inventory and other costs(assumed)
the weighted average cost of capital=(ke/equity share capital*100+kp/prefernce share capital*100+(1-tax rate)*kd/debentures amount*100)/total capital
In the given problem it is assumed that cost of capital is the cost incurred for maintaining average inventory and other cost
i.e,
1)a.Average inventory b. other costs c.Total(a+b) d. cost of capital (10%)
b. 1,50,000 3,00,000 4,50,000 45000(4,50,000*10%)
c. 1,00,000 3,00,000 4,00,000 40,000
d. 75,000 3,00,000 3,75,000 37,500
e.60,000 3,00,000 3,60,000 36,000
f. 50,000 3,00,000 3,50,000 35,000
2)a.Average inventory b. other costs c.Total(a+b) d. cost of capital (15%)
a.2,00,000 3,00,000 5,00,000 75,000
b. 1,50,000 3,00,000 4,50,000 67,500(4,50,000*15%)
c. 1,00,000 3,00,000 4,00,000 60,000
d. 75,000 3,00,000 3,75,000 56,250
e.60,000 3,00,000 3,60,000 54,000
f. 50,000 3,00,000 3,50,000 52,500
2.
Average consumption = 2/30 days =0.67 per day
Reoder time (Average lead time) = 15 days
Reoder quantity = Average consumption*Average lead time
=0.67*15 days=10 units(app)
Reorder Point =Reorder quantity +Safety stock
=10+1=11 units
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