CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
14th Edition
ISBN: 9780357292877
Author: MOYER
Publisher: CENGAGE L
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Question
Chapter 18, Problem 19P
a)
Summary Introduction
To calculate: The placing time of the orders.
b)
Summary Introduction
To calculate: The average inventory and yearly carrying costs.
c)
Summary Introduction
To calculate: The reorder point.
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The 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 .
A store sells a product that has the annual demand of 16,156 units. It purchases the product from
supplier A for
$74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost.
The cost to
place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time
of 7 days.
The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total
annual
inventory and purchase cost for the store?
Use at least 4 decimal places.
Auto Zone purchases replacement brake fluid reservoirs directly from the manufacturer. Demand is roughly 1000 units per month over the year. Ordering costs are $25 per order and the reservoirs are $10.00 per unit. Annual holding costs are 20% of the value of the inventory. There are 311 working days per year and the lead time is 5 days. Address the following inventory management issues that need to be resolved. a) What is the EOQ for this component? b) What is the reorder point? c) What is the cycle time? d) What are the total annual holding and ordering costs associated with your recommended EOQ?
Chapter 18 Solutions
CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
Ch. 18 - Prob. 1QTDCh. 18 - Prob. 2QTDCh. 18 - Prob. 3QTDCh. 18 - Prob. 4QTDCh. 18 - Prob. 5QTDCh. 18 - Prob. 6QTDCh. 18 - Prob. 7QTDCh. 18 - Prob. 8QTDCh. 18 - Prob. 9QTDCh. 18 - Prob. 10QTD
Ch. 18 - Prob. 11QTDCh. 18 - Prob. 12QTDCh. 18 - Prob. 13QTDCh. 18 - Prob. 14QTDCh. 18 - Prob. 15QTDCh. 18 - Prob. 16QTDCh. 18 - Prob. 17QTDCh. 18 - Prob. 18QTDCh. 18 - Prob. 19QTDCh. 18 - Prob. 20QTDCh. 18 - Prob. 21QTDCh. 18 - Prob. 22QTDCh. 18 - Prob. 1PCh. 18 - Prob. 2PCh. 18 - Prob. 3PCh. 18 - Prob. 4PCh. 18 - Prob. 5PCh. 18 - Prob. 6PCh. 18 - Prob. 7PCh. 18 - Prob. 8PCh. 18 - Prob. 10PCh. 18 - Prob. 11PCh. 18 - Prob. 12PCh. 18 - Prob. 13PCh. 18 - Prob. 14PCh. 18 - Prob. 15PCh. 18 - Prob. 16PCh. 18 - Prob. 17PCh. 18 - Prob. 18PCh. 18 - Prob. 19PCh. 18 - Prob. 20PCh. 18 - Prob. 21P
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- 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: Compute the annual ordering cost. Compute the annual carrying cost. Compute the cost of Ottis’s current inventory policy. Is this the minimum cost? Why or why not? Economic Order Quantityarrow_forward1) The two most important questions as an inventory manager is how much units to order and when to order. You are working as an Inventory Manager in a manufacturing company. You have forecasted that annual requirement of a part is 72,000 units. The order cost is $1000 per order, the holding rate is 20 percent and the part cost is $200 per unit. Your firm operates 360 days a year. The lead time is 06 days. Determine: Economic Order Quantity (EOQ) Annual holding cost Annual order cost, and Annual total inventory cost? Calculate the re order point.arrow_forwardA company produces motor bikes. It needs 5400 tires every year. It buys tires from a supplier for OMR 20 per tire. The company’s inventory carrying cost is estimated to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate: (A) Economic Ordering Quantity. (B) Minimum total inventory cost per year. (C) Ordering quantity for each month (D) Average inventory at any time (E) Optimum order interval (F) Write complete conclusionarrow_forward
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