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CMA Final · Strategic Cost Management · Simulation

A Kolkata firm simulates inventory. Daily demand: 1 unit (0.4), 2 units (0.6), allocated as 00-39 and 40-99. Opening stock is 3 units. Each day demand is met from stock if available; unmet demand is lost at Rs 50 per unit lost contribution. No replenishment arrives in the 4-day period. Random numbers for four days are 71, 15, 88, 52. What is the total lost contribution?

Lost contribution is Rs 200. Demands are 2, 1, 2 and 2 units; the opening 3 units cover days 1 and 2, after which stock is nil, so 4 units are lost on days 3 and 4 at Rs 50 each.

  1. ARs 0
  2. BRs 50Correct
  3. CRs 100
  4. DRs 150

Explanation

Demands: 71 gives 2, 15 gives 1, 88 gives 2, 52 gives 2. Stock 3: day 1 sells 2, stock 1; day 2 sells 1, stock 0; day 3 demand 2 is all lost; day 4 demand 2 is all lost. Lost units = 4, so loss = 4 x 50 = Rs 200. Thus the loss is Rs 200.

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