CUSTOM COST ACCT 2521 SWP W/ ACCESS
17th Edition
ISBN: 9781323674116
Author: Pearson
Publisher: Pearson Custom Publishing
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Textbook Question
Chapter 20, Problem 20.23E
EOQ for a retailer. The Fabric World sells fabrics to a wide range of Industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information:
| Annual demand for denim cloth | 40,700 yards |
| Ordering cost per purchase order | $185 |
| Carrying cost per year | 10% of purchase costs |
| Safety-stock requirements | None |
| Cost of denim cloth | $11 per yard |
The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week).
- 1. Calculate the EOQ for denim cloth.
Required
- 2. Calculate the number of orders that will be placed each year.
- 3. Calculate the reorder point for denim cloth.
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Students have asked these similar questions
The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information:
Annual demand for denim cloth 40,700 yards
Ordering cost per purchase order $185
Carrying cost per year 10% of purchase costs
Safety-stock requirements = None
Cost of denim cloth $11 per yard
The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week).
Q. Calculate the reorder point for denim cloth
The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information:
Annual demand for denim cloth 40,700 yards
Ordering cost per purchase order $185
Carrying cost per year 10% of purchase costs
Safety-stock requirements = None
Cost of denim cloth $11 per yard
The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week).
Q. Calculate the EOQ for denim cloth.
The Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the
Cloth Banaza
has collected the following information:
Annual demand for denim cloth
29,250 yards
Ordering cost per purchase order
$195
Carrying cost per year
20% of purchase costs
Safety-stock requirements
None
Cost of denim cloth
$15 per yard
The purchasing lead time is 2 weeks. The
Cloth Banaza
is open
250
days a year
(50
weeks for 5 days a week).
1.
Calculate the EOQ for denim cloth.…
Chapter 20 Solutions
CUSTOM COST ACCT 2521 SWP W/ ACCESS
Ch. 20 - Why do better decisions regarding the purchasing...Ch. 20 - Name six cost categories that are important in...Ch. 20 - What assumptions are made when using the simplest...Ch. 20 - Give examples of costs included in annual carrying...Ch. 20 - Give three examples of opportunity costs that...Ch. 20 - What are the steps in computing the cost of a...Ch. 20 - Why might goal-congruence issues arise when...Ch. 20 - JIT purchasing has many benefits but also some...Ch. 20 - What are three factors causing reductions in the...Ch. 20 - You should always choose the supplier who offers...
Ch. 20 - Prob. 20.11QCh. 20 - What are the main features of JIT production, and...Ch. 20 - Distinguish inventory-costing systems using...Ch. 20 - Describe three different versions of backflush...Ch. 20 - Discuss the differences between lean accounting...Ch. 20 - The order size associated with the...Ch. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Lyle Co. has only one product line. For that line,...Ch. 20 - Just-in-time inventory assumes all of the...Ch. 20 - Economic order quantity for retailer. Wonder Line...Ch. 20 - Economic order quantity, effect of parameter...Ch. 20 - EOQ for a retailer. The Fabric World sells fabrics...Ch. 20 - EOQ for manufacturer. Sk8 Company produces...Ch. 20 - Sensitivity of EOQ to changes in relevant ordering...Ch. 20 - JIT production, relevant benefits, relevant costs....Ch. 20 - Backflush costing and JIT production. Grand...Ch. 20 - Backflush costing, two trigger points, materials...Ch. 20 - Backflush costing, two trigger points, completion...Ch. 20 - Prob. 20.30PCh. 20 - Prob. 20.31PCh. 20 - Prob. 20.32PCh. 20 - Prob. 20.33PCh. 20 - JIT purchasing, relevant benefits, relevant costs....Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Backflush costing and JIT production. The Acton...Ch. 20 - Backflush, two trigger points, materials purchase...Ch. 20 - Backflush, two trigger points, completion of...Ch. 20 - Lean accounting. Reliable Security Devices (RSD)...Ch. 20 - JIT production, relevant benefits, relevant costs,...
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