Material Requirement Planning (MRP) System: The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate. Economic Order Quantity (EOQ): Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size. Just-in-Time (JIT) Inventory: Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier. To compute: The actual cost of producing and carrying units in inventory using MRP system.

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Answer 1

Question

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

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MRP, EOQ, and JIT. Tech Works Corp. produces J-Pods, music players that can download thousands of songs. Tech Works forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost of each J-Pod is $54. In its MRP system, due to the large $10,000 cost per setup, Tech Works plans to produce J-Pods once a month in batches of 4,000 each. The carrying cost of a unit in inventory is $17 per year.

Tech Works Corp. produces J-Pods, music players that can download thousands of songs. Tech Works forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost of each J-Pod is $54. In its MRP system, due to the large $10,000 cost per setup, Tech Works plans to produce J-Pods once a month in batches of 4,000 each. The carrying cost of a unit in inventory is $17 per year. Q. Using the MRP system, what is the annual cost of producing and carrying J-Pods in inventory? (Assume that, on average, half of the units produced in a month are in inventory.)

Tech Works Corp. produces J-Pods, music players that can download thousands of songs. Tech Works forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost of each J-Pod is $54. In its MRP system, due to the large $10,000 cost per setup, Tech Works plans to produce J-Pods once a month in batches of 4,000 each. The carrying cost of a unit in inventory is $17 per year. Q.Tech Works is also considering switching from its MRP system to a JIT system. This will result in producing J-Pods in batch sizes of 600 J-Pods and will reduce obsolescence, improve quality, and result in a higher selling price. Tech Works will reduce setup time and setup cost. The new setup cost will be $500 per setup. What is the annual cost of producing and carrying J-Pods in inventory under the JIT system?

Answer 2

Question

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Answer 6

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

Answer 7

Chapter 20, Problem 20.32P

1.

To determine

Material Requirement Planning (MRP) System:

The system that produces the finished goods with the help of raw material and semi finished goods is known as the material requirement planning. It involve the planning and controlling of inventory in such a way that the production will optimally generate.

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Just-in-Time (JIT) Inventory:

Just in time inventory approach means to purchase the inventory when it is needed. This approach does not consider the storage of inventory factor. Most of the companies use this approach to avoid the wastage arises due to extra inventory. When the need of inventory arises the purchase manager will purchase the inventory from supplier.

To compute: The actual cost of producing and carrying units in inventory using MRP system.

Answer 8

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

Answer 9

2.

To determine

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

Answer 10

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

Answer 11

3.

To determine

To compute: The actual cost of producing and carrying units in inventory using JIT system.

Answer 12

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Answer 13

4.

To determine

To explain: The MRP system and JIT system and there advantages and disadvantages.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

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...

Solution Summary: The author explains the Material Requirement Planning (MRP) system that produces finished goods with the help of raw material and semi-finished goods.

The optimum batch size and number of batches also calculate the annual cost of producing and carrying if the company uses optimal batch size. Compare this cost with the cost calculated in part1.

To compute: The actual cost of producing and carrying units in inventory using JIT system.

To explain: The MRP system and JIT system and there advantages and disadvantages.

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Chapter 20 Solutions