Given the following data, solve for the EOQ time requested below: • • Plumbing Supplies Inc. sells 2,500 bathroom sinks per month. Plumbing Supplies Inc. purchases 5,000 bathroom sinks per order. • Lead time to receive an order is 12 days. • Cost to place an order is $30. • Annual cost to hold one sink in inventory is $5.75. (A) Under its present policy of purchasing 5,000 sinks per order, what is the total annual inventory cost of Plumbing Supplies? (B) Calculate the economic order quantity for Plumbing Supplies Inc.

Given the following data, solve for the EOQ time requested below: • • Plumbing Supplies Inc. sells 2,500 bathroom sinks per month. Plumbing Supplies Inc. purchases 5,000 bathroom sinks per order. • Lead time to receive an order is 12 days. • Cost to place an order is $30. • Annual cost to hold one sink in inventory is $5.75. (A) Under its present policy of purchasing 5,000 sinks per order, what is the total annual inventory cost of Plumbing Supplies? (B) Calculate the economic order quantity for Plumbing Supplies Inc.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
A retailer anticipates selling 3,000 units of its product at a uniform rate over the next year. Each time the retailer places an order for a units, it is charged a flat fee of $50. Carrying costs are S30 per unit per year. How many times should the retailer reorder each year and what should be the lot size to mınımize inventory costs? What is the minimum inventory cost? Use the formula ECQ to obtain your answers. They should order times a year units The minimum inventory cost is $
An auto parts supplier sells batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The suppliers pays $28 for each battery and estimates that the annual holding cost is $8.40 per year. It costs approximately $20 to place an order. Assume a 250-day working year. a. Compute for the EOQ round off your answer to the nearest whole number. b. Compute for the expected number of orders. Round off your answer to the nearest whole number. c. Compute for the expected time between orders. Round off your answer to the nearest whole number.
Tool Mart sells 1,400 electronic water pumps every year. These pumps cost $54.30 each. If annual inventory carrying costs are 12% and the cost of placing an order is $90. What is the firm's EOQ?
5. Genesis Company is a wholesaler. It purchases 60.000 units of Product X per month for sale to retailers. The cost of placing an order is P100. The cost of holding one unit of inventory for one year is P4. Note: Kindly input your answer with comma. Example: 10,000 Required: Previously, the company had been purchasing 5,000 units of product X per order: a. What is the ordering cost per year under the previous policy? b. The annual carrying cost? c. How much money does the company save over the policy of purchasing 5,000 units per order using the EOQ policy?
A flower shop uses 230 clay pots a month. The pots are purchased for $2 each. Annual holding cost is estimated to be 25 percent of purchase cost, and ordering cost is $18 per order. The manager has been using an order quantity of 230 flower pots. a. Calculate the EOQ. (Round the final answer to the nearest whole number.) EOQ pots b. Calculate the EOQ's total annual inventory control cost. (Round the final answer to 2 decimal places.) TC $ c. What additional annual inventory control cost is the shop incurring by using the current order quantity? (Round the final answer to 2 decimal places.) Additional cost $
! Required information [The following information applies to the questions displayed below] Shadee Corporation expects to sell 500 sun shades in May and 380 in June. Each shade sells for $151. Shadee's beginning and ending finished goods inventories for May are 80 and 55 shades, respectively. Ending finished goods inventory for June will be 60 shades. Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $14 per hour. Additionally, Shadee's fixed manufacturing overhead is $8,000 per month, and variable manufacturing overhead is $15 per unit produced. Required: 1. Prepare Shadee's direct labor budget for May and June. 2. Prepare Shadee's manufacturing overhead budget for May and June. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Shadee's direct labor budget for May and June. Note: Do not round your intermediate calculations. Round your answers to 2 decimal places. Budgeted Direct Labor Cost May…
The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the store order, and what will be the total annual inventory cost for that order quantity?
A retailing company believes it can sell 4 million of its main product within the upcoming financial year. The inventory manager plans to order its main product forty times over the next year. The carrying cost is $0.03 per product per year. The order cost is $600 per order. Calculate the following: i) The annual carrying costs ECM Manufacturing Company Limited has three (3) possible suppliers, all of which offer different credit terms. Apart from the slight differences in credit terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in table shown on the next page. Supplier Credit Terms Supplier 1 1/10 net 30 EOM Supplier 2 2/20 net 75 EOM Supplier 3 3/10 net 50 EOM Assuming a 365-day year, answer the following. d. What impact, if any, will “stretching” the accounts payable (net period only) of supplier 3 by 30 days, have on your answer to part b with regards to supplier 3. Ans…
Crane, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $30 and are sold for $40. Glass pitchers cost $26 and are sold for $47. All other costs are fixed at $280,800 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year. Crane, Inc., has just received a sales catalog from a new supplier that is offering plastic pitchers for $28. What would be the new contribution margin per unit if managers switched to the new supplier? What would be the new breakeven point if managers switched to the new supplier? (Use contribution margin per unit to calculate breakeven units. Round answers to 0 decimal places, e.g. 25,000.)
Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Caldwell buys 100, 100 units at an average unit cost of $11 and sells them at an average unit price of $21. The firm also has fixed operating costs of $250,100 for the year. Caldwell's customers are demanding a 11% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 3% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 690 and can decrease the cost of each shipment by $4 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (i.e., target cost) for warehousing if the firm desires to earn the same amount of profit next…