Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 15, Problem 15.6P

EOQ, reorder point, and safety stock Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock.

  1. a. Calculate the EOQ.
  2. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.)
  3. c. Determine the reorder point.
  4. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. Explain.
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me EOQ, reorder point, and safety stock Alexis Company uses 905 units of a product per year on a continuous basis. The product has a fixed cost of $49 per order, and its carrying cost is $5 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. ents un a. Alexis' EOQ is units. (Round to the nearest whole number.) eText edia Librai al Calculat r Resource Enter your answer in the answer box and then click Check Answer. ic Study 3 parts remaining es Clear All Check Answer unication Tools > OK 10 Type here to search 5/1 insert
ne EOQ, reorder point, and safety stock Alexis Company uses 835 units of a product per year on a continuous basis. The product has a fixed cost of $41 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a ptions safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.) b. Alexis' average level of inventory is units. (Round to the nearest whole number.) c. Alexis' reorder point is units. (Round to the nearest whole number.) Which of the following will change if the firm does not hold the…
2. Hamid Company consumes inventory of 100,000 units of components per year. The carrying cost per unit is RO 3.50. The fixed order cost is RO 20 per order. The production planning is 365-day year. The delivery time is three days. a. Calculate and interpret the Economic Order Quantity (EOQ). b. At what inventory level should Hamid Company place another order. Interpret.

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Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

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