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Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021:   Average monthly market demand 2,000 lamps   Ordering costs $ 200 per order   Inventory carrying costs 20% per annum   Cost of lamps $ 1000 per lamp   Normal usage 100 lamps per week   Minimum usage 50 lamps per week   Maximum usage 200 lamps per week   Lead time to supply 4 - 6 weeks   Compute: Economic order quantity.  Maximum level of stock.  Minimum level of stock.

Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021:   Average monthly market demand 2,000 lamps   Ordering costs $ 200 per order   Inventory carrying costs 20% per annum   Cost of lamps $ 1000 per lamp   Normal usage 100 lamps per week   Minimum usage 50 lamps per week   Maximum usage 200 lamps per week   Lead time to supply 4 - 6 weeks   Compute: Economic order quantity.  Maximum level of stock.  Minimum level of stock.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation during 2021:

 

Average monthly market demand 2,000 lamps

 

Ordering costs $ 200 per order

 

Inventory carrying costs 20% per annum

 

Cost of lamps $ 1000 per lamp

 

Normal usage 100 lamps per week

 

Minimum usage 50 lamps per week

 

Maximum usage 200 lamps per week

 

Lead time to supply 4 - 6 weeks

 

Compute:

  • Economic order quantity. 
  • Maximum level of stock. 
  • Minimum level of stock. 
  • Re-order level of stock. 
  • What tradeoffs in costs are involved in computing the Economic Order Quantity? 
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      • Re-order level of stock.
  • What tradeoffs in costs are involved in computing the Economic Order Quantity
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