Printing the Daily Cause List on a Fixed Budget
The High Court office prints a daily cause list for six court halls. In June there are 24 working days, and the office uses 18 reams of paper per working day. On 1 June the stationery register shows 65 reams in stock. The office must keep a buffer of 10 reams and add wastage equal to 8% of monthly consumption; wastage is rounded up to the next whole ream because reams cannot be split. Two suppliers quote. Supplier A charges ₹285 per ream plus 12% GST and gives free delivery only for orders of 200 reams or more; below that, delivery is ₹450. Supplier B charges ₹299 per ream inclusive of GST and allows a 3% discount on orders above 250 reams. The sanctioned budget for the month is ₹1,25,000. The Junior Assistant must place one order that covers the month, stays within budget, and does not breach the buffer rule.
1. Calculate the number of reams the office must order for June. Show each rounding decision.
Read the worked answer
Monthly consumption = 18 × 24 = 432 reams.
Wastage = 8% of 432 = 34.56 reams. Because a part ream cannot be ordered, round up to 35 reams. Rounding down to 34 would leave only 0.44 ream of cover, which is not enough.
Total requirement = 432 + 35 + 10 buffer = 477 reams.
Order quantity = 477 − 65 opening stock = 412 reams.
Check: closing stock after the month = 65 + 412 − 432 − 35 = 10 reams, exactly the buffer. The order is therefore sufficient without being excessive.
2. Compare the two quotations on landed cost for 412 reams and recommend one, stating the budget position.
Read the worked answer
Supplier A
Basic cost = 412 × ₹285 = ₹1,17,420.
GST at 12% = ₹14,090.40.
Landed cost = ₹1,17,420 + ₹14,090.40 = ₹1,31,510.40. Delivery is free because 412 is above 200.
This exceeds the ₹1,25,000 budget by ₹6,510.40.
Supplier B
Basic cost = 412 × ₹299 = ₹1,23,188.
Discount at 3% = ₹3,695.64.
Net cost = ₹1,23,188 − ₹3,695.64 = ₹1,19,492.36. GST is already included, so there is no further tax. 412 is above 250, so the discount applies.
This is within budget by ₹5,507.64.
Recommendation: place the order with Supplier B. It is ₹12,018.04 cheaper on a landed-cost basis and is the only quotation that fits the sanctioned budget. A pre-tax comparison would wrongly favour A, because A’s basic price is lower but GST changes the result.
3. Suppose the register actually showed 90 reams on 1 June. Recalculate the order and test whether the recommendation changes.
Read the worked answer
Revised order = 477 − 90 = 387 reams.
Supplier A: 387 × ₹285 = ₹1,10,295. GST = ₹13,235.40. Total = ₹1,23,530.40. Delivery is free. This is now within budget by ₹1,469.60.
Supplier B: 387 × ₹299 = ₹1,15,713. Discount at 3% = ₹3,471.39. Net = ₹1,12,241.61. This is within budget by ₹12,758.39.
B is still cheaper, by ₹11,288.79. The recommendation does not change: both quotations now fit the budget, so the office should choose the lower landed cost, which is B. The key point is that the earlier recommendation rested on both cost and budget; after the stock correction only cost decides, and it still points to B.