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Calculate the economic order quantity

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Question 1:

Tampin Berhad, a manufacturer of paints, uses 3000 liter of chemicals per year. The cost of ordering the chemicals is RM20 per order. The cost of holding the chemicals in the warehouse is RM2 per liter per year. The lead time is 7 days.

Required:

a. Calculate the economic order quantity (EOQ).

b. Determine the Reorder Point of the chemicals.

c. The total credit sales of Tampin Berhad in 2018 were RM30 million. Accounts receivable were RM2 million. Calculate the Average Collection Period (ACP)

d. Terachi Berhad sells its product on terms of 7/10 net 30. The total credit sales last year were RM30 million. Accounts receivable were RM2 million. Do customers of Tampin Berhad pay on time? Why?

Reference no: EM132516274

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