Upload
vikas-goyal
View
218
Download
0
Embed Size (px)
Citation preview
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
1/24
Material
Lectur-9
Main Ahmed Farhan (ACA)
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
2/24
Inventory Control System
1. Order level.
2. Maximum stock level.3. Minimum stock level.
4. Danger level.
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
3/24
Inventory Control System
Ordering point or Re-order level
Maximum consumption x Lead time
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
4/24
Inventory Control System
Maximum stock level
Ordering level-(Minimum consumption*Lead time) +E.O.Q
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
5/24
Inventory Control System
Minimum stock level
Order level-(Average consumption*Lead time)
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
6/24
ExampleMaximum consumption 1000 units per day.
Minimum consumption 800 units per day.
Average consumption 900 units per day.Lead time 5 to 10 days
Average lead time 8 days
Emergency lead time 2 days
Economic order quantity 2500 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
7/24
Order Level
Maximum consumption x Lead time
1000 units x 10 days
= 10,000 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
8/24
Maximum Stock Level
Ordering level-(Minimum consumption*Lead time) +E.O.Q
10,000-(800 * 5)+25000
= 31000 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
9/24
Minimum Stock Level
Ordering point (Average daily consumption*Lead time)
10,000 (900 * 8)
= 2800 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
10/24
Danger Level
Average daily consumption x Emergency time
900 x 2
= 1800 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
11/24
Economic Order Quantity (E.O.Q)
Economic Order Quantity is the quantity which an
entitle orders to the suppliers. This order Quantityshould be Economical.
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
12/24
Methods for EOQ calculation
Economic Order Quantity
Formula
Table Graph
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
13/24
E.O.Q
2x RU x O.C
U.C x C.C%
RU Annual Required units
O.C Ordering Cost (Cost Per Order)U.C Per Unit CostC.C Carrying Cost
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
14/24
Example
Annual required units 80,000 unitsOrder cost Rs. 1200
Per Unit cost Rs. 6
Carrying cost 50% U.C
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
15/24
Solution
2 x 80,000 x 1200
6 x 50%EOQ =
= 8000 Units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
16/24
EOQ
2 x 80,000 x 12003
8000 =
2x RU x O.CU.C x C.C%
EOQ
2 x 80,000 x 12003
8000 =
22
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
17/24
EOQ
80,000 x 12003/2
8000 * 8000 =
80,000 x 12008000
8000 * 3/2 =
12,000 = 12,000
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
18/24
No Of Orders
No of orders
RU
Ordering quantity=
100 / 50 = 2 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
19/24
Average Inventory
Average Inventory
Ordering Quantity
2
8000 units
2= 4000 units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
20/24
Table Method
Order Qty RU # oforders
O.C
# oforders *
1200
C.C
Orderqty/2 * 3
Total cost
20,000 80,000 4 4,800 30,000 34,800
10,000 8 9,600 15,000 24,600
8,000 10 12,000 12,000 24,000
5,000 16 19,200 7,500 26,700
4,000 20 24,000 6,000 30,000
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
21/24
Diagram (E.O.Q.)
ORDER SIZE (Q) (000)
Carrying Cost
Ordering Cost
Total Cost
COSTS
(000)
54 10 208
6
12
18
24
30
36
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
22/24
Inventory Cost
Defective units
Spoiled units
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
23/24
Losses
Normal Loss : The Loss which was expected
Abnormal Loss : The Loss which was not expected
8/12/2019 Cost & Management Accounting - MGT402 Power Point Slides Lecture 09
24/24
Charge Of Loss
Normal Loss FOH cost
Abnormal Loss Job
Charge
Charge