Hats Pty (Ltd) is a single shop that sells a variety of footwear. The manager of the shoprecently reported that due to increased sales after the revamp of the mall where they aresituated, the shop is out of stock at times. She estimated the following demand and relatedprobabilities when asked to do so:Demand in lead time (units) ProbabilityExpected value600.2120.60.2Expected demand in lead 90time901205424The cost of placing an order is R500 and the cost of carrying one unit of inventory for a yearis R10. The shop sells 5000 units per year. Therefore, the economic order quantity (EOQ) forthe shop is 707 units. The average selling price per unit is R300 and the associated cost perunit is R150.Required:Evaluate whether the shop should keep sufficient safety stock on hand to avoid out-of-inventory costs.

Average Sale per day- 5000 units /365 days - 14 units/ day Lead…

Hats Pty (Ltd) is a single shop that sells a variety of footwear. The manager of the shop recently reported that due to increased sales after the revamp of the mall where they are situated, the shop is out of stock at times. She estimated the following demand and related probabilities when asked to do so: Demand in lead time (units) Probability Expected value 0.2 06 0.2 Expected demand in lead 90 time 12 54 60 90 120 24 The cost of placing an order is R500 and the cost of carrying one unit of inventory for a year is R10. The shop sells 5000 units per year. Therefore, the economic order quantity (EOQ) for the shop is 707 units. The average selling price per unit is R300 and the associated cost per unit is R150.

Hats Pty (Ltd) is a single shop that sells a variety of footwear. The manager of the shop recently reported that due to increased sales after the revamp of the mall where they are situated, the shop is out of stock at times. She estimated the following demand and related probabilities when asked to do so: Demand in lead time (units) Probability Expected value 0.2 06 0.2 Expected demand in lead 90 time 12 54 60 90 120 24 The cost of placing an order is R500 and the cost of carrying one unit of inventory for a year is R10. The shop sells 5000 units per year. Therefore, the economic order quantity (EOQ) for the shop is 707 units. The average selling price per unit is R300 and the associated cost per unit is R150.

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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