Question

Maria's Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each....

Maria's Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.

The economic order quantity (rounded) is

a.

1,000 containers.

b.

750 containers.

c.

45 containers.

d.

387 containers.

The lead time is 4 working days and the average rate of usage is 60 containers per day. What is the reorder point?

a.

240 containers

b.

260 containers

c.

220 containers

d.

200 containers

The lead time is 4 working days, the average rate of usage is 60 containers per day, and the company carries a safety stock of 25 containers. What is the reorder point?

a.

285 containers

b.

245 containers

c.

265 containers

d.

225 containers
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer 1.

Annual usage = 25,000 containers
Annual carrying cost per container = $3
Ordering cost per order = $9

Economic order quantity = (2 * Annual usage * Ordering cost per order / Annual carrying cost per container)^(1/2)
Economic order quantity = (2 * 25,000 * $9 / $3)^(1/2)
Economic order quantity = 150,000^(1/2)
Economic order quantity = 387 containers

Answer 2.

Average daily usage = 60 containers
Lead time = 4 days

Reorder point = Average daily usage * Lead time
Reorder point = 60 * 4
Reorder point = 240 containers

Answer 3.

Average daily usage = 60 containers
Lead time = 4 days
Safety stock = 25 containers

Reorder point = Average daily usage * Lead time + Safety stock
Reorder point = 60 * 4 + 25
Reorder point = 265 containers

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Moriah’s Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each....
Moriah’s Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year. ​ The lead time is 4 working days and the average rate of usage is 60 containers per day. What...
Soster makes and sells candles. Each candle uses 0.6 kilograms of wax. Budgeted production of candles...
Soster makes and sells candles. Each candle uses 0.6 kilograms of wax. Budgeted production of candles in units for the next five months is as follows: March April May June July Budgeted Production 20,000 17,000 18,000 15,000 16,000 The company wants to maintain monthly ending inventories of wax equal to 25% of the following month's budgeted production needs. There were 1,300 kilograms of wax on hand on March 31 and 900 kilograms at March 1. The cost of wax is...
ABC Company annually buys 600,000 units of Part B. The EOQ is 12,000 units. The ABC...
ABC Company annually buys 600,000 units of Part B. The EOQ is 12,000 units. The ABC Company’s average usage equals 2,000 units/day (600,000 units/300 working days) and the average lead-time for ordering Part A is 6 days. 48.  What is the reorder point with no variability in either usage or lead-time? a. 11,000 units b. 12,000 units c. 13,000 units d. 14,000 units 49.  What is the level of safety stock if usage could be as high as 2,200 units/day? a. 1,200...
COST ACCOUNTING - COST ESTIMATION AND MATERIALS CONTROL Pluto Company has developed the following data to...
COST ACCOUNTING - COST ESTIMATION AND MATERIALS CONTROL Pluto Company has developed the following data to assist in controlling one of its materials inventory items EOQ 1,000 liters Average daily use 100 liters Maximum daily use 120 liters Working days per year 250 days Safety stock 140 liters Cost of carrying inventory P1 per liter per year Lead time 7 days What is the reorder point? What is the average inventory? what is the maximum inventory assuming normal lead time...
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price...
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8 per stone for quantities of 600 stones or more, $9 per stone for orders of 400 to 599 stones, and $10 per stone for lesser quantities. The jewelry firm operates 200 days per year. Usage rate is 25 stones per day, and ordering costs are $48. a. If carrying costs are $2 per year for each stone, find the order quantity that...
Alexis Company uses 800 units of a product per year on a continuous basis. The product...
Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a shipment after an order is placed. And the firm wishes to hold 10 days usage in inventory as a safety stock Calculate the EOQ Determine the average level of inventory. (Note: Use a 365 day year to calculate daily...
R & B beverage company has a soft drink product that has a constant annual demand...
R & B beverage company has a soft drink product that has a constant annual demand rate of 3600 cases. A case of the soft drink costs R & B $3. Ordering costs are $20 per order and holding costs are 25% of the value of the inventory. R & B has 250 working days per year, and the lead time is 5 days. Identify the following aspects of the inventory policy: a. Economic order quantity b. Reorder point d....
Ace Manufacturing produces commercial lawnmowers units in batches. the company estimates the demand for the year...
Ace Manufacturing produces commercial lawnmowers units in batches. the company estimates the demand for the year is 10,000 units. It costs about $80 to set up the manufacturing process, and the carrying cost is about 70 cents per unit per year. When the production process has been set up, 120 lawnmowers units can be made daily. The demand during the production period is approximately 60 units per day. The company operates its production area 167 days per year and includes...
You manage inventory for your company and use a continuous review inventory system to control reordering...
You manage inventory for your company and use a continuous review inventory system to control reordering items for stock. Your company is open for business 300 days per year. One of your most important items experiences demand of 20 units per day, normally distributed with a standard deviation of 3 units per day. You experience a lead time on orders from your supplier of six days with a standard deviation of two days. The unit price, regardless of order size,...
15. A store has an ordering cost of $250, a carrying cost of $4 per unit,...
15. A store has an ordering cost of $250, a carrying cost of $4 per unit, annual product demand of 6,000 units, and it purchases product from a supplier for $500 per unit, however, the supplier has offered the store a discount price of $400 if it will purchase 1,200 units; the store’s minimum total inventory cost is a. $2,407,300 b. $3,607,200 c. $3,464,000 d. $2,987,400 16. If a store has annual demand (365 days per year) of 6,000 units...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT