The Fabric World 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 Fabric World has collected the following information: Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying cost per year 10% of purchase costs Safety-stock requirements = None Cost of denim cloth $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). Q. Calculate the number of orders that will be placed each year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Fabric World 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 Fabric World has collected the following information:


Annual demand for denim cloth 40,700 yards

Ordering cost per purchase order $185

Carrying cost per year 10% of purchase costs

Safety-stock requirements = None

Cost of denim cloth $11 per yard

The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week).

Q. Calculate the number of orders that will be placed each year.

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