THE BMZ ACADEMY
THE BMZ ACADEMY
@0 6 8 0 5 3 8 2 1 3
BMZ ACADEMY 068 053 8213
, THE BMZ ACADEMY
MANCOSA: BBA (HONS) Assessment
A class-based discussion with model answers to PAST EXAMINATIONS AND
Assignment
Model Solutions provided in this document are not intended for cheating, rather
to provide a starting point.
All solutions were presented based on class discussion.
Further breakdown are given for each question to give students a
comprehensive starting point and keep on referencing to the relevant areas.
BMZ ACADEMY 068 053 8213
, THE BMZ ACADEMY
QUESTION 1
1.1 REQUIRED Use the information given below to calculate the following:
Monthly sales: 3,750 units
Selling price per unit: R14
Purchase price: Cost plus 40% (meaning the selling price is 140% of cost)
Carrying cost: 10% of the unit purchase price
Ordering cost: R100 per order
1.1.1 Economic order quantity
Annual Demand (D)
Monthly sales = 3,750 units
Annual demand (D) = 3,750 × 12 = 45,000 units
Unit Purchase Price (P)
Selling price = R14 (which is 140% of cost)
14
So, cost (purchase price) = = 𝑅 10
1.4
Purchase price (P) = R10
Carrying Cost per Unit (H)
Carrying cost = 10% of purchase price = 0.10 × R10 = R1 per unit per year
Ordering Cost (S)
Ordering cost (S) = R100 per order
BMZ ACADEMY 068 0 5 3 8 2 1 3Page 3 of 33
, THE BMZ ACADEMY
2𝐷𝑆
Economic Order Quantity (EOQ) =√ 𝐻
Where:
D = Annual demand = 45,000
S = Ordering cost = 100
H = Carrying cost per unit = 1
2×45000×100
EOQ = √ = √9000000 = 3,000 units
1
Answer: EOQ = 3,000 units
1.1.2 The number of orders to be placed annually based on the economic order
quantity
𝐷 45,000
Number of orders = 𝐸𝑂𝑄 = = 15
3,000
1.1.3 The total ordering costs and total carrying costs.
Total ordering cost = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 × 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑜𝑟𝑑𝑒𝑟 = 15 ×
100 = 𝑅1,50015 × 100 = 𝑅1,500
Total carrying cost = Average inventory × Carrying cost per unit
𝐸𝑂𝑄 3,000
Average inventory = = = 1,500 𝑢𝑛𝑖𝑡𝑠
2 2
Total carrying cost = 1,500 × 1 = 𝑅1,500
INFORMATION (20 Marks)
BMZ ACADEMY 068 0 5 3 8 2 1 3Page 4 of 33
THE BMZ ACADEMY
@0 6 8 0 5 3 8 2 1 3
BMZ ACADEMY 068 053 8213
, THE BMZ ACADEMY
MANCOSA: BBA (HONS) Assessment
A class-based discussion with model answers to PAST EXAMINATIONS AND
Assignment
Model Solutions provided in this document are not intended for cheating, rather
to provide a starting point.
All solutions were presented based on class discussion.
Further breakdown are given for each question to give students a
comprehensive starting point and keep on referencing to the relevant areas.
BMZ ACADEMY 068 053 8213
, THE BMZ ACADEMY
QUESTION 1
1.1 REQUIRED Use the information given below to calculate the following:
Monthly sales: 3,750 units
Selling price per unit: R14
Purchase price: Cost plus 40% (meaning the selling price is 140% of cost)
Carrying cost: 10% of the unit purchase price
Ordering cost: R100 per order
1.1.1 Economic order quantity
Annual Demand (D)
Monthly sales = 3,750 units
Annual demand (D) = 3,750 × 12 = 45,000 units
Unit Purchase Price (P)
Selling price = R14 (which is 140% of cost)
14
So, cost (purchase price) = = 𝑅 10
1.4
Purchase price (P) = R10
Carrying Cost per Unit (H)
Carrying cost = 10% of purchase price = 0.10 × R10 = R1 per unit per year
Ordering Cost (S)
Ordering cost (S) = R100 per order
BMZ ACADEMY 068 0 5 3 8 2 1 3Page 3 of 33
, THE BMZ ACADEMY
2𝐷𝑆
Economic Order Quantity (EOQ) =√ 𝐻
Where:
D = Annual demand = 45,000
S = Ordering cost = 100
H = Carrying cost per unit = 1
2×45000×100
EOQ = √ = √9000000 = 3,000 units
1
Answer: EOQ = 3,000 units
1.1.2 The number of orders to be placed annually based on the economic order
quantity
𝐷 45,000
Number of orders = 𝐸𝑂𝑄 = = 15
3,000
1.1.3 The total ordering costs and total carrying costs.
Total ordering cost = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 × 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑜𝑟𝑑𝑒𝑟 = 15 ×
100 = 𝑅1,50015 × 100 = 𝑅1,500
Total carrying cost = Average inventory × Carrying cost per unit
𝐸𝑂𝑄 3,000
Average inventory = = = 1,500 𝑢𝑛𝑖𝑡𝑠
2 2
Total carrying cost = 1,500 × 1 = 𝑅1,500
INFORMATION (20 Marks)
BMZ ACADEMY 068 0 5 3 8 2 1 3Page 4 of 33
