Problem 11-19 (Algo)The annual demand for a product is 15,000 units. The weekly demand is 288 units with a standard deviation of 80 units. The cost toplace an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.10 per unit.a. Find the reorder point necessary to provide a 90 percent service probability.Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places.Reorder pointunitsb. Suppose the production manager is asked to reduce the safety stock of this item by 45 percent. If she does so, what will the newservice probability be?Note: Use Excel's NORM.S.DIST() function to find the correct probability for your computed z value. Round "z" value to 2decimal places and final answer to 1 decimal place.Service probability%

Step 1:Given:D: Annual demand for the product = 15,000 unitsd: Weekly demand = 288 unitsσ: Standard…

Answered: Problem 11-19 (Algo) The annual demand…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 19P

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Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are: Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesnt it equal the fixed cost calculated in Requirement 1?
2. 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. 219 S b. Calculate and interpret the optimal number of orders to be placed. the ida c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order.Interpret.
Problem 1:A. Your firm uses a fixed order quantity system and operates 52 weeks per year. One of the items handled has the following characteristicsAnnual Demand = 20,000 unitsOrder Cost = $ 40 per orderHolding Cost = $ 2 per unit per yearLead time = 2 weeksDemand is normally distributed with a standard deviation of weekly demand of 100 units.a) Calculate the itemâ€™s EOQ. What is the average time between orders (in weeks)b) Find the safety stock and reorder point that provide a 95% customer service levelB. The University Bookstore at a prestigious private university buys mechanical pencils from a wholesaler. The wholesaler. The wholesaler offers discounts for large according to the following price schedule:Order Quantity Price per Unit0 â€“ 200 $ 4.00201 â€“ 2,000 $ 3.502,001 or more $ 3.25Problem 2:A. A textile manufacturer wants to set up a control chart for irregularities (.e.g. oil stains, shop soil, loose threads, and tears) per 100…
Calculate the EOQ for exercise 8 if annual demand is 10,000 units,inventory storage costs average 20 percent, unit price is $50, and orderingcosts are $30.
5. Economic Order Quantity Jimin Company requires 40,000 units for its signature product BTS. The units will be used evenly throughout the year. The cost to place one order is P 20 while the cost to carry the inventory for one year is P 0.40 per unit. REQUIRED: A) Determine the optimal order quantity (EOQ). B) How many orders should be placed within the year? C) How often should the units be ordered within a year? D) Determine the average inventory in units.
3. Find out the ordering cost from the following information, Annual demand is 240 units, holding cost RO 4 per unit for a year and EOQ is 60 units.
Question 4: Compute the EOQ given the following information. The annual consumption is 6000 units, ordering cost is RO 60 per order and carrying cost is 20% of the price. The supplier quotes the following prices for the component. No of units bought at time Price per unit Less then 1000 OMR 10 1000 to 2999 OMR 9.5 3000 and above OMR 9 What is the optimal order quantity?
Diagnostic Supplies has expected sales of 98,000 units per year, carrying costs of $5 per unit, and an ordering cost of $8 per order. a. What is the economic ordering quantity? Economic ordering quantity b-1. What is the average inventory? Average inventory b-2. What is the total carrying cost? Total carrying cost units units
QUESTION 1 Suppose that the demand rate is 500 units per week. The fixed ordering cost is $50 per order. The unit inventory cost is 20% of the product cost. The cost of the product depends on the quantity ordered. It is $0.05 when you order less than 2300 units, $0.048 when you order between 2301 and 5000 units and $0.045 when you order more than 5000 units. What is your optimal order quantity if you intend to limit the number of units to at or below 2300 units? O 2136 O 2236 O 2300 O None of the above
Demand for a product is 12,000 units per year. Every time an order is made, the company must pay $15.00 per order. The cost to hold an order in inventory is $2.00 per unit per year. Calculate the cost if the company orders 3,000 units each time. O A. $100 O B. $125 OC. $10,000 O D. $150
Annual Demand = 10,000 units Days per year considered in average daily demand = 365 Cost to place an order = $10 Holding cost per unit per year = 0.01% of cost per unit Lead time = 3 days Cost per unit = $15 Determine the economic order quantity and the reorder point. Also find the Annual Ordering and Holding Cost. State some significance of the obtained results.
Find the optimal order quantity of a product for which the price breaks are as follows: Quantity(units) Price per unit(Rs.) 0 < Q1 < 100 20.00 100 <= Q2 < 200 18.00 200 <= Q3 16.00 The monthly demand for the product is 200 units, the storage cost is 20 percent of the unit cost and the cost of ordering is Rs. 25 per order.

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