Samantha Ross is the procurement manager for the headquarters of a large financial company chain with a central inventory operation. Ross's quick moving inventory item has a demand of 7000 units per year. Each unit cost $120, and the inventory holding cost is $15 per unit per year. The average ordering cost is $31 per order. It takes about 6 days for an order to arrive. This corporate operation and there are 250 working days. What is the WOW What is the average of the EOQ used What is the optimal number of orders per year What is the optimal number of days in between any two orders What is the annual cost of ordering and holding inventory Including the cost of 7000 units. What is the total annual inventory cost

Samantha Ross is the procurement manager for the headquarters of a large financial company chain with a central inventory operation. Ross's quick moving inventory item has a demand of 7000 units per year. Each unit cost $120, and the inventory holding cost is $15 per unit per year. The average ordering cost is $31 per order. It takes about 6 days for an order to arrive. This corporate operation and there are 250 working days. What is the WOW What is the average of the EOQ used What is the optimal number of orders per year What is the optimal number of days in between any two orders What is the annual cost of ordering and holding inventory Including the cost of 7000 units. What is the total annual inventory cost

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
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: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
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: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Samantha Ross is the procurement manager for the headquarters of a large Financial company chain with a central inventory operation. Ross’ quick-moving inventory item has a demand of 7,000 units per year. Each unit cost $120, and the inventory holding cost is $15 per unit per year. The average ordering cost is $31 per order. It takes about 6 days for an order to arrive. (This is a corporate operation, and there are 250 working days per year.) a) What is the optimal number of orders per year?
Samantha Ross is the procurement manager for the headquarters of a large Financial company chain with a central inventory operation. Ross’ quick-moving inventory item has a demand of 7,000 units per year. Each unit cost $120, and the inventory holding cost is $15 per unit per year. The average ordering cost is $31 per order. It takes about 6 days for an order to arrive. (This is a corporate operation, and there are 250 working days per year.) a) What is the annual cost of ordering and holding inventory? b) Including the cost of the 7,000 units. What is the total annual inventory cost? c) What is the total annual cost?
Malburn Construction Ltd. Manufactures and distributes window frames. The company uses 600,000metal strips in producing the frames for the year. Each strip cost $15, the storage cost is 10% of the costprice and $180 is required to make an order.(i). Find the order size Malburn Construction needs to minimize its inventory costs. Calculate for the company:(ii). the number of orders placed per year. (iii).the length of the stock cycle in days. (iv). the annual ordering cost (v). the annual holding cost (vi). the total annual cost
ACE processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are 60 per year and ordering costs are 252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. (a) Calculate the economic order quantity. (b) Calculate the total cost per year to order and carry this item.
SamaCell has a demand of 2,000 cells per year. The cost of each unit is $80, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about two days for an order to arrive and there are 250 working days per year. Round to two decimal places. a) What is the EOQ? units. b) What is the average inventory if the EOQ is used? units. c) What is the optimal number of orders per year? orders. d) What is the optimal number of days in between any two orders? days. e) What is the annual cost of ordering and holding inventory? USD. What is the reorder point (ROP)?
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?
A flower shop uses 230 clay pots a month. The pots are purchased for $2 each. Annual holding cost is estimated to be 25 percent of purchase cost, and ordering cost is $18 per order. The manager has been using an order quantity of 230 flower pots. a. Calculate the EOQ. (Round the final answer to the nearest whole number.) EOQ pots b. Calculate the EOQ's total annual inventory control cost. (Round the final answer to 2 decimal places.) TC $ c. What additional annual inventory control cost is the shop incurring by using the current order quantity? (Round the final answer to 2 decimal places.) Additional cost $
Iguana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 per hour. Iguana has the following inventory policies: • Ending finished goods inventory should be 40 percent of next month's sales. • Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May June July August 275 250 300 400 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold. Iguana, Incorporated, had $10,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit…
Iguana, Incorporated, manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $1.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. • Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May June July August 325 350 400 500 475 525 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,000 ($500 per month) for expected production of 5,000 units for the year. Selling and administrative expenses are estimated at $550 per month plus $0.60 per unit sold. Iguana, Incorporated, had $12,000 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50…