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Annual Target Order Item On-Hand Demand Level Quantity Nut – 6 mm 500 22 Nut – 8 mm 750 54 Bolt – 6 mm 200 Bolt – 8 mm 100 6. Screw #8 - 30 mm 250 12 Screw #8 - 40 mm 200 8. Washer - 8 mm 380 20 Washer - 10 mm 100 5 Pin – Split 400 40

Annual Target Order Item On-Hand Demand Level Quantity Nut – 6 mm 500 22 Nut – 8 mm 750 54 Bolt – 6 mm 200 Bolt – 8 mm 100 6. Screw #8 - 30 mm 250 12 Screw #8 - 40 mm 200 8. Washer - 8 mm 380 20 Washer - 10 mm 100 5 Pin – Split 400 40

FINANCIAL ACCOUNTING
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 small hardware store uses a periodic review system to control inventory and
calculate order quantities. Inventory is reviewed every 2 weeks and there is a
1-week lead time for delivery. Safety stock is set at 1 week’s supply. The following
table shows the products and the current on-hand inventory. Calculate the target
level and order quantity for each of the items. Use 50 weeks per year for your
calculations.

Annual Target Order Item On-Hand Demand Level Quantity Nut – 6 mm 500 22 Nut – 8 mm 750 54 Bolt – 6 mm 200 Bolt – 8 mm 100 6. Screw #8 - 30 mm 250 12 Screw #8 - 40 mm 200 8. Washer - 8 mm 380 20 Washer - 10 mm 100 5 Pin – Split 400 40
Transcribed Image Text:Annual Target Order Item On-Hand Demand Level Quantity Nut – 6 mm 500 22 Nut – 8 mm 750 54 Bolt – 6 mm 200 Bolt – 8 mm 100 6. Screw #8 - 30 mm 250 12 Screw #8 - 40 mm 200 8. Washer - 8 mm 380 20 Washer - 10 mm 100 5 Pin – Split 400 40
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