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Discuss the hedging approach of working capital

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Reference no: EM132739482

On average, Suriatronix(Suria) needs 23,400 kilograms of raw materials every years. The stock of raw materials will be replenished on a weekly basis at a fixed ordering cost of RM130 per order. The carrying cost per kilogram is Rm34 per year. (Assuming 52 weeks a year)

Problem 1: From the above information, you required to calculate:

a) the total inventory cost if Suria is ordering at current unit.
b) the economic order quantity (EOQ) for Suria.
c) the total inventory cost if Suria is ordering at EOQ level.
d) should Suria change its' policy? Why.

Problem 2: Discuss the hedging (maturity) approach of working capital management?

Reference no: EM132739482

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