Question

A company anticipates selling 5500 units of a product at a uniform rate over the next year. When the company places an order for x units, it is charged a flat fee of $40. Carrying costs are $26 per unit per year. How many times should the company reorder each year and what should be the lot size of each order to minimize inventory costs? What is the minimum inventory cost?

Answer #1

A bookstore expects to sell 400 calculus textbooks during the
next year. It costs $4 to store one calculus textbook for one
year. To reorder, there is a fixed cost of $12.50, plus $0.50 for
each calculus textbook ordered. In what lot size and how many times
per year should an order be placed to minimize inventory costs?

A bookstore expects to sell 120 120 calculus textbooks during
the next year. It costs $1.65 to store one calculus textbook for
one year. To reorder, there is a fixed cost of $11 , plus $1.50 for
each calculus textbook ordered. In what lot size and how many times
per year should an order be placed to minimize inventory costs?

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...

A sporting goods store sells
100
pool tables per year. It costs
$50
to store one pool table for a year. To reorder, there is a
fixed cost of
$25
per shipment plus
$18
for each pool table. How many times per year should the store
order pool tables, and in what lot size, in order to minimize
inventory costs?

(ECP)A sporting goods store sells 100 pool tables per year. It
costs $20 to store one pool table for a year. To reorder, there is
a fixed cost of $40 per shipment plus $16 for each pool table. How
many times per year should the store order pool tables, and in what
lot size, in order to minimize inventory costs?

Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 96,000 units per year is: Direct materials $ 1.80
Direct labor $ 3.00 Variable manufacturing overhead $ 0.90 Fixed
manufacturing overhead $ 5.15 Variable selling and administrative
expenses $ 1.50 Fixed selling and administrative expenses $ 2.00
The normal selling price is $21.00 per unit. The company’s capacity
is 120,000 units per year. An order...

Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 90,000 units per year is:
Direct materials
$
1.90
Direct labor
$
4.00
Variable manufacturing overhead
$
0.90
Fixed manufacturing overhead
$
4.55
Variable selling and administrative expenses
$
1.30
Fixed selling and administrative expenses
$
3.00
The normal selling price is $24.00 per unit. The company’s
capacity is 109,200 units per year. An order...

Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 87,600 units per year is:
Direct materials
$
2.50
Direct labor
$
2.00
Variable manufacturing overhead
$
0.70
Fixed manufacturing overhead
$
3.65
Variable selling and administrative expenses
$
2.00
Fixed selling and administrative expenses
$
1.00
The normal selling price is $25.00 per unit. The company’s
capacity is 116,400 units per year. An order...

16) For supply item ABC, Andrews Company has been ordering 125
units based on the recommendation of the salesperson who calls on
the company monthly. A new purchasing agent has been hired by the
company who wants to start using the economic-order-quantity method
and its supporting decision elements. She has gathered the
following information:
Annual demand in units
250
Days used per year
250
Lead time, in days
10
Ordering costs
$100
Annual unit carrying costs
$20
Required:
Determine the...

Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 106,800 units per year is:
Direct materials
$
2.40
Direct labor
$
4.00
Variable manufacturing
overhead
$
1.00
Fixed manufacturing
overhead
$
4.05
Variable selling and
administrative expenses
$
1.90
Fixed selling and administrative
expenses
$
3.00
The normal selling price is $22.00 per unit. The company’s
capacity is 121,200 units per year. An order...

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