2. EOQ / Production / Discounts A machine company uses 3000 brackets during the course of a year. The brackets are bought from an external supplier at a price of 50 kr. each and will be received the same day as the order is placed. The average ordering cost is 187.50 kr. per order. The company uses an interest rate of 18% to account for the cost of capital, the cost of storage and handling is estimated to 4% and insurance to 3% of the value. You can assume that there are 250 working days in one year. a. Determine the economic order quantity for the brackets. b. Given the optimal order size from a, calculate the following: i. Cycle time. ii. Average inventory level. ii. Annual inventory cost. iv. Annual ordering cost. The company is able to produce the brackets themselves at a rate of 60 per day. The fixed cost of setting up for production run is 600 kr. You can also assume that the variable cost of production is equal to the price when buying from an external supplier. c. What is the optimal size of the production run for the brackets?

2. EOQ / Production / Discounts A machine company uses 3000 brackets during the course of a year. The brackets are bought from an external supplier at a price of 50 kr. each and will be received the same day as the order is placed. The average ordering cost is 187.50 kr. per order. The company uses an interest rate of 18% to account for the cost of capital, the cost of storage and handling is estimated to 4% and insurance to 3% of the value. You can assume that there are 250 working days in one year. a. Determine the economic order quantity for the brackets. b. Given the optimal order size from a, calculate the following: i. Cycle time. ii. Average inventory level. ii. Annual inventory cost. iv. Annual ordering cost. The company is able to produce the brackets themselves at a rate of 60 per day. The fixed cost of setting up for production run is 600 kr. You can also assume that the variable cost of production is equal to the price when buying from an external supplier. c. What is the optimal size of the production run for the brackets?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 12EB: Able Transport operates a tour bus that they lease with terms that involve a fixed fee each month...

See similar textbooks

Similar questions

.P3-5.Asupplier'seļls MF Tireş.to dealers. he annual.demandis.approximătely 1.000 tires. The supplier pays P50 for each tire and estimates that the annual: holding cost is 20 percent of:: the total value of tires, It.costs appröximately,P25 to place an prder. The supplier currently. orders 80 tifes per month. :Requited: Calculate ordering, holding; and-tótalilinventory.costs for the current ordered quảntity: a. b.. Determine the EOQ CS Scanned with CamScanner
An auto parts supplier sells batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The suppliers pays $28 for each battery and estimates that the annual holding cost is $8.40 per year. It costs approximately $20 to place an order. Assume a 250-day working year. a. Compute for the EOQ round off your answer to the nearest whole number. b. Compute for the expected number of orders. Round off your answer to the nearest whole number. c. Compute for the expected time between orders. Round off your answer to the nearest whole number.
A component manufacturer requires 5000 MT of special alloys per year. The ordering cost is $2000 per order. Unit cost per MT is $ 800. In bank charges an interest rate of 10% per year, what is the Economic Order Quantity? 1000 Units 700 Units 100 Units 500 Units
The annual demand for a certain product is 11,340 units. The company informs you that every time an order is placed for this product the cost per order incurred is £100. You are also told that the cost of holding one unit fora year is £0.7. What is the economic order quantity of the product?
A company has just purchased a machine with a cost of $79,994, and signed a note to pay the manufacturer equal semi-annual amounts of $9,378. If the current rate of interest is 6%, how many equal payments will be made? Select one: O a. 5 O b. 6 O C. 8 O d. 10 O e. 12
Currumbin Ltd sells a product for which they have a target profit of $30000. This product has variable costs of $4 per unit and total fixed costs of $45000. If 15000 units are to be sold, what should be the selling price? a. $2 b. $5 c. $3 d. $9 Arnold Company Pty Ltd provided these estimates for the three months ending 30 June 2020, its first period of operation. The beginning cash balance is $1,000. Cash receipts from sales $300 000 Cash payments for expenses 130 000 Payment for the purchase of new motor vehicle 15 000 Depreciation of motor vehicle 15 000 Repayment of a loan 100 000 What is the estimated cash balance at 30 June 2010? a. $55000 deficit b. $40000 surplus c. $56000 surplus d. $155000 surplus e. $50000 surplus Park Ltd produces financial calculators. The production capacity is 35,000 calculators, and the company is currently operating at 80% capacity. Variable…
To make a product it costs $24 per liter. The importation cost is a fixed cost of $ 150 additional of the unit costs. The time that takes from placing the order to receiving it is 5 weeks. During this time the average consumed is 80 liters with a std dev. of 4 liters. If the products ends the costs is $45 per liter. They work 52 weeks a year. The anual interest is 20% What is the order size and reorder point if we want to accomplish 90% of demand in the cycles? What is the order size and reorder point if we want to minimize average costs? what would be service level type 2?
The weekly requirement of a component is 950 units. The order cost is RM85 per order, the holding cost is RM5 per unit per year and the component cost is RM250 per unit. The firm operates 52 weeks per year. i) Calculate the Economic Order Quantity (EOQ). [Hitungkan Kuantiti Pesanan Ekonomi (EOQ).] ii) Calculate annual total inventory cost. [Hitungkan jumlah kos inventori tahunan.)
A company manufacturing electronics equipment purchases transistors at Rs . 41 per unit. The annual requirement of transistors is 7000 units and the ordering cost is Rs 300 per order , carrying cost is. Rs. 8 per unit, lead time is 7 days. Calculate EOQ and reorder point where per day demand is 28 units ?
Zen Inc. uses one raw material type in its manufacturing process. It needs 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If Zen purchases 1,000 kilograms each time, how much lower would the annual cost be if Zen would now follow the EOQ model?
Pioneer Limited purchases a product which has a steady monthly demand of 20 000 units. The product costs R100 per unit. The ordering cost is R5 per order. The holding cost is 10% of the unit purchase price. Which one of the following represents the annual economic order quantity (rounded off to the next whole number)? Select one: O A. 142 О В. 980 О С. 283 O D. 490
pioneer limited purchases a product which has a steady monthly demand of 20000 units. The product costs R100 per unit. The ordering cost is R5 per order. The holding cost is 10% of the unit purchase price. Which one of the following represents the annual economic order quantity A. 142 B. 980 C. 283 D. 490