EXERCISE 7.

1) The company Alfas SA, used the Alpha-Omega component for the manufacture of its product, industrial coolant (Polar Bear). For each item you need 2 liters of component, which is priced at $ 20 a liter. The company plans to their level of inventories in advance, so that there are no shortages in inventory. The purchasing department has a policy of ordering the raw material supplier on the first day of the month. Below are the following:

Inventory Initial of January Invetory final desired for January Invetory final desired for February Invetory final desired for March

10000 15000 30000 20000

ltrs ltrs ltrs ltrs

Scheduled production for three months is as follows:

Production in January Production in February Production in March

5000 productos 9000 productos 14000 productos

Perform:

Assuming perform such plans, what would be the total cost of purchased materials in each of the first three months? What would be the cost assuming the price remains constant during the first half?

EXERCISE SOLUTION 7.1

VARIABLES
UNIT COST OF RAW MATERIAL $ RAW MATERIAL REQUIREMENTS FOR PRODUCT INVENTARIOS INV INITYAL JANUARY 10000 ltrs IN FINAL DESIRED JANUARY 15000 ltrs INV FINAL DESIRED FEBRUARY 30000 ltrs INV FINAL DESIRED MARCH 20000 ltrs PRODUCCION JANUARY 5000 uni FEBRUARY 9000 uni MARCH 14000 uni 20.00 2 ltrs

MODEL
Compaa Alfas S.A Requirement of Raw Materials JANUARY REQUIRED PRODUCTION OF REFRIGERANT *REQUIREMENT OF RAW MATERIAL BY EACH PRODUCT = REQUIREMENT OF RAW MATERIAL BY REFRIGERANT - INVENTORY INITIAL OF RAW MATERIAL + INVENTORY FINAL OF RAW MATERIAL = SHOPPING OF RAW MATERIALS * UNIT COST OF RAW MATERIALS TOTAL COST OF REQUIREMENT OF RAW MATERIALS FEBRUARY 9000 2 ltrs 18000 ltrs -15000 ltrs 30000 ltrs 33000 ltrs 20.00 660,000

5000 2 ltrs 10000 ltrs -10000 ltrs 15000 ltrs 15000 ltrs $ 20.00 $ $ 300,000 $

acture of its product, industrial iced at $ 20 a liter. The company es in inventory. The purchasing ay of the month. Below are the

aterials in each of the first three he first half?

MARCH 14000 2 ltrs 28000 ltrs -30000 ltrs 20000 ltrs 18000 ltrs $ 20.00 $ 360,000