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MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:

MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:

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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MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:
Transcribed Image Text:MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:
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