Jumbo Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. The firm uses the item at a constant rate each year. Calculate the Economic Order Quantity AND Use the data from problem above and assume that Jumbo Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Jumbo desires to keep a safety stock of 4 units. Calculate the reorder point

Jumbo Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. The firm uses the item at a constant rate each year. Calculate the Economic Order Quantity AND Use the data from problem above and assume that Jumbo Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Jumbo desires to keep a safety stock of 4 units. Calculate the reorder point

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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1. You have been asked to assess a proposed project to buy a new automated assembly machine that will replace four workers. The machine will cost $315,000 to buy and install. It will also have an estimated maintenance cost of $2000 annually. The machine’s expected lifespan will be 14 years and it will have an estimated salvage value of $4500 at the end of those 14 years. The machine will save the cost of four employees, whose individual salary and benefits cost is $41,000 per year. The corporate WACC rate is 5%. What is the NPV and IRR of this cash flow? 2. You have two other project alternatives that could replace the project in Question 1. Alternative B is an internal project that has an NPV of $932,000. Alternative C is an external investment that has an IRR of 31%. Alternative A is the project described in Question 1. Which of these three mutually exclusive alternatives will you select and why?