Total Equipment Purchase Calculation
To understand the total expenditure on the equipment purchased by the manufacturer, we need to break down the details provided.
Unit Cost
- The cost per unit of the equipment is ts 30. This is the price the manufacturer pays for each unit of equipment.
Annual Demand
- The total annual requirement for the equipment is 800 units. This indicates the quantity that the manufacturer needs over the year.
Total Annual Cost
- To calculate the total annual cost, we multiply the unit cost by the total annual demand:
- Total Cost = Unit Cost x Annual Demand
- Total Cost = ts 30 x 800 units
- Total Cost = ts 24,000
Budget Considerations
- The manufacturer should ensure that the budget allocated for equipment procurement can accommodate the total cost of ts 24,000. This figure is critical for financial planning and resource allocation.
Implications for Procurement Strategy
- Understanding the total cost allows the manufacturer to explore potential procurement strategies, such as:
- Bulk purchasing: This can lead to discounts or better pricing.
- Supplier negotiations: Engaging with suppliers to potentially lower the unit cost.
- Inventory management: Ensuring optimal inventory levels to meet demand without overstocking.
Conclusion
- In summary, the total cost for purchasing the equipment amounts to ts 24,000 for the year based on the given unit price and annual needs. Strategic planning in procurement can lead to cost savings and efficiency improvements in operations.