$17.28 per order. The annual holding cost is 20% of the purchase price of $20 p following information is provided to you by the management accountant to use in yo The Normal usage 200 units per day Maximum usage 280 units per day Minimum usage 120 units per day Reorder period 20 to 30 days Required: Determine the FOO using the equation method

$17.28 per order. The annual holding cost is 20% of the purchase price of $20 p following information is provided to you by the management accountant to use in yo The Normal usage 200 units per day Maximum usage 280 units per day Minimum usage 120 units per day Reorder period 20 to 30 days Required: Determine the FOO using the equation method

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 19P

See similar textbooks

Similar questions

Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
Seah Corporation presents the following data: Usage is 400 units per month, cost per order is P20, and carrying cost per unit is P6. Given these data, answer the following questions: (A) What is the economic order quantity? (B) How many orders are required each month?
2. The ABC Company consumes inventory of 67,500 units of components per year. The carrying cost per unit is RO 1.50. The fixed order cost is RO 25 per order. The production planning is 365-day year. a. What is the Economic Order Quantity (EOQ)? Interpret. 219 S b. Calculate and interpret the optimal number of orders to be placed. the ida c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order.Interpret.
‏The ABC Company consumes inventory of 67,500 units of components per year . The carrying cost per unit is RO 1.50 . The fixed order cost is RO 25 per order . The production planning is 365 - day year . a . What is the Economic Order Quantity ( EOQ ) ? Interpret . b . Calculate and interpret the optimal number of orders to be placed. c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order? Interpret .
The ordering cost for a certain product is $8 per order and the holding cost is $1 per year. The annual demand is 2400 units. Consider the following ordering plans: plan 1: Order all 2400 at one time plan 2: Order 400 once each quarter plan 3: Order 100 once each month Determine: (a) Calculate the annual total costs associated with each plan (plan 1, 2 and 3), and compare the costs (total cost, holding costs and ordering cost). (b) Is there another plan, cheaper than any of these? Calculate the total cost of the cheaper or optimal plan; and for the optimal plan determine how many times in a year an order needs to be in place. (c) In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, will the new EOQ increase or decrease then by what percentage.
Use the information provided below to calculate the annual Economic Order Quantity. INFORMATIONThe following details have been supplied by Fuze Limited for one of its products:Sales per month 7 500 unitsCarrying costs as a percentage of the unit purchase price 20%Purchase price per unit R100Cost of placing an order R10
multiple choice Luster Corporation presents the following data: Usage is 400 units per month, cost per order is P20, and carrying cost per unit is P6. Given these data, answer the following questions: (A) What is the economic order quantity? (B) How many orders are required each month? A. (A) 32 and (B) 6B. (A) 32 and (B) 8C. (A) 52 and (B) 6D. (A) 52 and (B) 8E. (A) 62 and (B) 10
A new purchasing agent has been hired by company XYZ who wants to start using EOQ method And its supporting decision elements. The following information has been gathered Annual demand in units 260,000 units Working days per year Lead time in days 260 12 Ordering cost per purchase order Annual unit carrying cost 160 30 Required: (5pts each) a) Find the EOQ b) Number of orders to be made per year c) Average daily demand d) Total ordering cost e) Total carrying cost What is the total relevant cost with the EOQ g) Select a ordering amount ABOVE the EOQ, what is the total relevant ordering and total relevant carrving cost and grand total of both h) IF the company has been ordering in quantity of 1000 units, what is the S savings by now using the EOQ
Calculate the EOQ for exercise 8 if annual demand is 10,000 units,inventory storage costs average 20 percent, unit price is $50, and orderingcosts are $30.
The following information relates to a company . The fixed cost per order is ksh 1,500 The purchase price per unit is ksh 35 The carrying costs per unit of inventory 10% of the purchase price The annual demand is 5,000units Calculate theEconomic Order Quantity Total number of orders in a year Leadtime
An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeks Maximum delivery time: 3.5 weeks Normal usage: 52 000 units per year Purchase price per unit: R8.50 Cost of placing an order: R18.00 Interest rate: 2% per year Storing cost per unit: R2.50 a). Calculate the safety stock b). Calculate the lead time c). Calculate the EOQ. d). Calculate the re-order point if the organisation does not keep safety stock. e). Calculate the re-order point if the organisation has a policy to keep safety stock. f). Calculate the safety stock that should be kept by the organisation.
The annual demand for a certain product is 11,340 units. The company informs you that every time an order is placed for this product the cost per order incurred is £100. You are also told that the cost of holding one unit fora year is £0.7. What is the economic order quantity of the product?