A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.

A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A manufacturer has a production facility that
requires 19,111 units of component JY21 per year.
Following a long-term contract, the manufacturer
purchases component JY21 from a supplier with a
lead time of 6 days. The unit purchase cost is $12.8
per unit. The cost to place and process an order
from the supplier is $113 per order. The unit
inventory carrying cost per year is 20 percent of the
unit purchase cost. The manufacturer operates 250
days a year. Assume EOQ model is appropriate.
What is the optimal total annual inventory and
purchase cost for the manufacturer?
Use at least 4 decimal places.

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