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The Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim​ cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering​ high-quality merchandise. The purchasing officer of the Cloth Banaza has collected the following​ information:                                                                      Annual demand for denim cloth 29,250 yards Ordering cost per purchase order $195 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth $15 per yard   The purchasing lead time is 2 weeks. The Cloth Banaza is open 250 days a year ​(50 weeks for 5 days a​ week).                                                                                          1. Calculate the EOQ for denim cloth. 2. Calculate the number of orders that will be placed each year. 3. Calculate the reorder point for denim cloth.

The Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim​ cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering​ high-quality merchandise. The purchasing officer of the Cloth Banaza has collected the following​ information:                                                                      Annual demand for denim cloth 29,250 yards Ordering cost per purchase order $195 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth $15 per yard   The purchasing lead time is 2 weeks. The Cloth Banaza is open 250 days a year ​(50 weeks for 5 days a​ week).                                                                                          1. Calculate the EOQ for denim cloth. 2. Calculate the number of orders that will be placed each year. 3. Calculate the reorder point for denim cloth.

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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The Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim​ cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering​ high-quality merchandise. The purchasing officer of the

Cloth Banaza

has collected the following​ information:                                                                     

Annual demand for denim cloth
29,250 yards
Ordering cost per purchase order
$195
Carrying cost per year
20% of purchase costs
Safety-stock requirements
None
Cost of denim cloth
$15 per yard
 
The purchasing lead time is 2 weeks. The
Cloth Banaza
is open
250
days a year
​(50
weeks for 5 days a​ week).                                                                                         
1.
Calculate the EOQ for denim cloth.
2.
Calculate the number of orders that will be placed each year.
3.
Calculate the reorder point for denim cloth.
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