Answered: Item X is a standard item stocked in a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Item X is a standard item stocked in a company’s inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.

a. How many units of Item X should be ordered each time?

94 units
95 units
100 units
2,000 units

b. When should Item X be ordered?

50 times a year
Every 50 days
Every 9 days
Whenever Item X’s inventory level drops to 50 units

c. How many times per year would Item X be ordered?

21 times
50 times
40 times
None of the above

Please answer ALL OF THE QUESTIONS above and I will rate helpful. Please thank you!

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