An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 240,000 units while that for laptops is 60,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a. What is the optimal order size and order frequency with each of Foxconn and Flextronics. Draw inventory profile for each product? Consider the following changes and answer the questions below The company is thinking of combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia. b. If the fixed cost of each shipment remains $??? (As modified by you), what is the optimal order frequency and order size from the combined orders? c. Compare the annual total cost of separate and jointly ordering strategy? d. Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 240,000 units while that for laptops is 60,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a. What is the optimal order size and order frequency with each of Foxconn and Flextronics. Draw inventory profile for each product? Consider the following changes and answer the questions below The company is thinking of combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia. b. If the fixed cost of each shipment remains $??? (As modified by you), what is the optimal order frequency and order size from the combined orders? c. Compare the annual total cost of separate and jointly ordering strategy? d. Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 240,000 units while that for laptops is 60,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000.
Answer the following question:
a. What is the optimal order size and order frequency with each of Foxconn and Flextronics. Draw inventory profile for each product?
Consider the following changes and answer the questions below
The company is thinking of combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia.
b. If the fixed cost of each shipment remains $??? (As modified by you), what is the optimal order frequency and order size from the combined orders?
c. Compare the annual total cost of separate and jointly ordering strategy?
d. Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education