CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Required: (PLEASE ANSWER 4 TO 7 ONLY) 4. Determine the number of orders. 5. How much is the total carrying cost? 6. How much is the total ordering cost? 7. How much is the total cost of inventory 8. What will be your advice to the management?
CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Required: (PLEASE ANSWER 4 TO 7 ONLY) 4. Determine the number of orders. 5. How much is the total carrying cost? 6. How much is the total ordering cost? 7. How much is the total cost of inventory 8. What will be your advice to the management?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
Required: (PLEASE ANSWER 4 TO 7 ONLY)
4. Determine the number of orders.
5. How much is the total carrying cost?
6. How much is the total ordering cost?
7. How much is the total cost of inventory
8. What will be your advice to the management?
Transcribed Image Text:CASE 5
Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of
$300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
Required:
1. Compute for the economic order quantity size.
2. Determine the reorder point.
3. Determine the average inventory balance.
4. Determine the number of orders.
5. How much is the total carrying cost?
6. How much is the total ordering cost?
7. How much is the total cost of inventorv
8. What will be your advice to the management?
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