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appropriate. of inventory What is the optimal length cycle in days?

appropriate. of inventory What is the optimal length cycle in days?

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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A manufacturer has a production facility that requires 14,979 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 14 days. The unit purchase cost is $27 per unit. The cost to place and process an order from the supplier is $172 per order. The unit inventory carrying cost per year is 17 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal length of inventory cycle in days? Use at least 4 decimal places.
Transcribed Image Text:A manufacturer has a production facility that requires 14,979 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 14 days. The unit purchase cost is $27 per unit. The cost to place and process an order from the supplier is $172 per order. The unit inventory carrying cost per year is 17 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal length of inventory cycle in days? Use at least 4 decimal places.
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