The Every Day Fabric 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 Every Day Fabric has collected the following information: E (Click the icon to view the information.) Read the requirements. Requirement 1. Calculate the EOQ for denim cloth. Begin by selecting the formula used to calculate EOQ. (D= Demand in units for one year, P= Ordering cost per purchase order, C= Carrying cost of one unit in stock, Q= Any order quantity.) (Round the denominator to the nearest cent.) Data Table The EOQ for denim cloth is yards. Requirement 2. Calculate the number of orders that will be placed each year. Annual demand for denim cloth 20,000 yards Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year. Ordering cost per purchase order $160 Carrying cost per year 20% of purchase costs Number of orders Safety-stock requirements None orders per year Cost of denim cloth $8 per yard Requirement 3. Calculate the reorder point for denim cloth. The purchasing lead time is 2 weeks. The Every Day Fabric is open 250 days a year (50 weeks for 5 days a week). Determine the formula used to calculate the reorder point for denim cloth, then calculate the reorder point. Reorder point yards Print Done
The Every Day Fabric 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 Every Day Fabric has collected the following information: E (Click the icon to view the information.) Read the requirements. Requirement 1. Calculate the EOQ for denim cloth. Begin by selecting the formula used to calculate EOQ. (D= Demand in units for one year, P= Ordering cost per purchase order, C= Carrying cost of one unit in stock, Q= Any order quantity.) (Round the denominator to the nearest cent.) Data Table The EOQ for denim cloth is yards. Requirement 2. Calculate the number of orders that will be placed each year. Annual demand for denim cloth 20,000 yards Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year. Ordering cost per purchase order $160 Carrying cost per year 20% of purchase costs Number of orders Safety-stock requirements None orders per year Cost of denim cloth $8 per yard Requirement 3. Calculate the reorder point for denim cloth. The purchasing lead time is 2 weeks. The Every Day Fabric is open 250 days a year (50 weeks for 5 days a week). Determine the formula used to calculate the reorder point for denim cloth, then calculate the reorder point. Reorder point yards Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Every Day Fabric 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 Every Day Fabric has collected the following information:
(Click the icon to view the information.)
Read the requirements.
Requirement 1. Calculate the EOQ for denim cloth.
Begin by selecting the formula used to calculate EOQ. (D = Demand in units for one year, P = Ordering cost per purchase order, C = Carrying cost of one unit in stock, Q = Any order quantity.)
%3D
%3D
%3D
(Round the denominator to the nearest cent.)
Data Table
The EOQ for denim cloth is
| yards.
Requirement 2. Calculate the number of orders that will be placed each year.
Annual demand for denim cloth
20,000 yards
Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year.
Ordering cost per purchase order
$160
Carrying cost per year
20% of purchase costs
Number of orders
Safety-stock requirements
None
orders per year
Cost of denim cloth
$8 per yard
Requirement 3. Calculate the reorder point for denim cloth.
The purchasing lead time is 2 weeks. The Every Day Fabric is open
250 days a year (50 weeks for 5 days a week).
Determine the formula used to calculate the reorder point for denim cloth, then calculate the reorder point.
Reorder point
%3D
Print
Done
| yards
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