INTERMEDIATE FINANCIAL MANAGEMENT
14th Edition
ISBN: 9780357516669
Author: Brigham
Publisher: CENGAGE L
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Chapter 23, Problem 1P
a)
Summary Introduction
To determine: Economic order quality (EOQ).
b)
Summary Introduction
To determine: Maximum inventory
c)
Summary Introduction
To determine: Average inventory
d)
Summary Introduction
To determine: The number days to place the order.
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3. Aapki Humaari Beauty LLP requires 12000 units of Bear Shampoo annually as a part of its sales requirement, ordering one month usage at a time.
Each shampoo bottle costs Rs 100.The ordering cost per order is Rs 50 and the carrying cost of the average inventory on a yearly basis is 10%
You as an adviser to the company advise to buy the most economical order size.
a. The company looks forward for your advice on understanding the concept of economic order size.
b. Advise what should be desired quantity as per the economic purchase policy of the company and how much the company may save on account of ordering cost.
Note : You can round off any number to lower side for the calculation purpose
The annual demand for a particular chemical product is 1,200 units. Suppose that the annualholding cost is $24 per unit, and the ordering cost is $100.Part A: Find the optimal order quantity based on EOQ analysis, and calculate the combinedannual ordering and holding cost.Part B: Now suppose that the store manager finds out that the demand has been underestimated.Specifically, the correct annual demand is 1,500 units. On the other hand, due to operationalrestrictions she cannot change the order quantity and thus use the same order size from part A.How much this error cost the store? (This can also be considered as a penalty for parametermisestimation).
Given:
Peter Piper has projected sales of 72,000 pipes this year, ordering cost of P6 per order, and carrying costs of P2.40 per pipe.
With the given data, can you give me the solution on how to get:
-What is the economic ordering quantity?
-Total inventory cost at EOQ
-How many orders will be placed during the year?-What will the average inventory be?
Thank you in advance.
Chapter 23 Solutions
INTERMEDIATE FINANCIAL MANAGEMENT
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