II. A firm's requirement of materials is 3000 units (Price Rs 20 per unit) for 6 days. The ordering cost per order is Rs 30 and the carrying cost is Rs.50. If the schedule of discount given below is applicable to the firm, determine the most economical order quantity.
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- 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?Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?The quarterly demand for an item of raw materials is estimated at 2,000 units at a purchase price of GH¢180 per unit. It is estimated that the cost per order will be GH¢270 and the cost of holding a unit of material in inventory will be GH¢24.Required:i. Compute the optimal order quantity, and total minimum costs.ii. Suppose a supplier offers 5% quantity discount for purchase of 8,000 units, should the offer be accepted
- 1. Calculate Economic Order Quantity (EOQ), number of orders, annual ordering costs, annual carrying costs and total inventory costs from the following:Annual consumption: 6000 unitsCost of placing one Order: RO 60Carrying cost per unit: RO 22. Find out the EOQ, Annual ordering cost and annual holding cost from the following information. The demand is 19500 units per year, holding cost is RO 4 per unit for a year and ordering cost is RO 25 order. 3. Find out the ordering cost from the following information, Annual demand is 240 units, holding cost RO 4 per unit for a year and EOQ is 60 units.4. If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the interest and store keeping charges are 20% of the value and the cost of placing of an order and receiving the goods is RO 60, how much material should be ordered at one time? 5. Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 unitsper month. The valve cost of…The Dermaniaga Company has the following information available: Table 3: Total Monthly Sales Month Sales (RM)June 68,000July 72,000August 74,000September 76,000October 78,000 Additional information: Sales price per unit is RM200 and the finished goods inventory level is 25% of the next month's unit sales. 5 kilograms of materials are required for each unit produced and the cost is RM50/kg. Inventory levels for materials equal 40% of the needs for the next month. Desired ending inventory for September is 157 kilograms of materials. Beginning inventory for July was 138 kilograms of materials. Each unit requires 0.8 hours of direct labor and the average wage rate is RM12 per hour. Required: 1. Analyze a production budget for July, August, September and the quarter in total. 2. Analyze a direct materials purchases budget in kilograms and Ringgit Malaysia for July, August, September and in total for the quarter. 3. Construct a…If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the interest and store keeping charges are 20% of the value and the cost of placing of an order and receiving the goods is RO 60, how much material should be ordered at one time?
- Venus Industries consumes 20,000 units p.a. of a particular component. The supplier has offered the following pricing based on order size: Order Quantity (no of units per order) Cost per unit (Rs) 500 - 999 148 1,000 – 1,999 146 2,000 – 4,999 143 5,000 or More 142 For each order, the freight + delivery cost incurred is Rs 3,500, and administrative + documentation cost is Rs 500. Venus has estimated the carrying cost of inventory at Rs 50 per unit per annum. What is the best option for Venus to minimize its total cost?The demand for products is 10,000 units. The ordering cost is 40 OMR per order and the holding cost is 10 riyals per unit per annual. The EOQ will be a. 282.84 b. 335.41 c. 379.47 d. 296.641. Calculate Economic Order Quantity (EOQ), number of orders, annual ordering costs, annual carrying costs and total inventory costs from the following: Annual consumption: 6000 units ; Carrying cost per unit: RO 2 Cost of placing one Order: RO 60 2. Find out the EOQ, Annual ordering cost and annual holding cost from the following information. The demand is 19500 units per year, holding cost is RO 4 per unit for a year and ordering cost is RO 25 order. 3. Find out the ordering cost from the following information, Annual demand is 240 units, holding cost RO 4 per unit for a year and EOQ is 60 units. 4. If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the interest and store keeping charges are 20% of the value and the cost of placing of an order and receiving the goods is RO 60, how much material should be ordered at one time? 5. Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 units per month. The valve…
- Electric spark Co., uses 60,000 of component Zima. The cost of placing an order is estimated at $17.28 per order. The annual holding cost is 20% of the purchase price of $20 per unit. The following information is provided to you by the management accountant to use in your analysis: 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: 1. Determine the EOQ using the equation method 2. Calculate the total cost of inventory per year, in case the company decided to use the EOQ. 3. Electric spark has been offered a 2 per cent discount on the cost if it places orders in quantities of 20,000. Discuss whether the company should accept the discount and place larger orders .A company has annual demand for its product of 800,000 units. Eachunit costs $10. Ordering costs are $400 per order and the annual holdingcost per unit is $0.85.A 0.65% discount is available on all orders of atleast 15,000 units and a 0.75% discount for orders of at least 35,000units.Required:-Calculate the optimum order level to reduce total inventory costsThe 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 .