Machine Operator, manufacturer of shelving keeps stock of a wide range of components. The following data, you have established that: The cost to hold one unit for one year is $1.60. The cost of placing an order is $70.00. Lead Time: The supplier takes from one to two weeks to deliver goods ordered. Maximum 2 Weeks Minimum 1 Week The annual demand is 50,000 units Maximum usage5,000 usage Minimum usage 2,000 units Required: (a) On the basis of the above information, calculate for component B: (i) The minimum stock level (ii) The reorder level (iii) The EOQ (iv) The maximum stock level
Machine Operator, manufacturer of shelving keeps stock of a wide range of components. The following data, you have established that: The cost to hold one unit for one year is $1.60. The cost of placing an order is $70.00. Lead Time: The supplier takes from one to two weeks to deliver goods ordered. Maximum 2 Weeks Minimum 1 Week The annual demand is 50,000 units Maximum usage5,000 usage Minimum usage 2,000 units Required: (a) On the basis of the above information, calculate for component B: (i) The minimum stock level (ii) The reorder level (iii) The EOQ (iv) The maximum stock level
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 54P
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Machine Operator, manufacturer of shelving keeps stock of a wide range of components.
The following data, you have established that:
- The cost to hold one unit for one year is $1.60.
- The cost of placing an order is $70.00.
Lead Time: The supplier takes from one to two weeks to deliver goods ordered.
- Maximum 2 Weeks
- Minimum 1 Week
The annual demand is 50,000 units
- Maximum usage5,000 usage
- Minimum usage 2,000 units
Required:
(a) On the basis of the above information, calculate for component B:
(i) The minimum stock level
(ii) The reorder level
(iii) The EOQ
(iv) The maximum stock level
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