Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021: Average monthly market demand 2,000 lamps Ordering costs $ 200 per order Inventory carrying costs 20% per annum Cost of lamps $ 1000 per lamp Normal usage 100 lamps per week Minimum usage 50 lamps per week Maximum usage 200 lamps per week Lead time to supply 4 - 6 weeks Compute: Economic order quantity. Maximum level of stock. Minimum level of stock.
Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021: Average monthly market demand 2,000 lamps Ordering costs $ 200 per order Inventory carrying costs 20% per annum Cost of lamps $ 1000 per lamp Normal usage 100 lamps per week Minimum usage 50 lamps per week Maximum usage 200 lamps per week Lead time to supply 4 - 6 weeks Compute: Economic order quantity. Maximum level of stock. Minimum level of stock.
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 21P
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Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021:
Average monthly market demand 2,000 lamps
Ordering costs $ 200 per order
Inventory carrying costs 20% per annum
Cost of lamps $ 1000 per lamp
Normal usage 100 lamps per week
Minimum usage 50 lamps per week
Maximum usage 200 lamps per week
Lead time to supply 4 - 6 weeks
Compute:
- Economic order quantity.
- Maximum level of stock.
- Minimum level of stock.
- Re-order level of stock.
- What tradeoffs in costs are involved in computing the Economic Order Quantity?
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- Re-order level of stock.
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- What tradeoffs in costs are involved in computing the Economic Order Quantity
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