Cornerstones of Cost Management (Cornerstones Series)

3rd Edition

ISBN: 9781285751788

Author: Don R. Hansen, Maryanne M. Mowen

Publisher: Cengage Learning

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Textbook Question

Chapter 20, Problem 2CE

Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days.

Required:

1. Calculate the reorder point, using Equation 20.3.
2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory.
3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?

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Chapter 20, Problem 1CE

Chapter 20, Problem 3CE

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Chapter 20 Solutions

Cornerstones of Cost Management (Cornerstones Series)

Ch. 20 - What are ordering costs? What are setup costs?...Ch. 20 - Explain why, in the traditional view of inventory,...Ch. 20 - Discuss the traditional reasons for carrying...Ch. 20 - Prob. 4DQ Ch. 20 - Explain how safety stock is used to deal with...Ch. 20 - Prob. 6DQ Ch. 20 - What approach does JIT take to minimize total...Ch. 20 - One reason for inventory is to prevent shutdowns....Ch. 20 - Prob. 9DQ Ch. 20 - Explain how long-term contractual relationships...

Ch. 20 - What is a constraint? An internal constraint? An...Ch. 20 - Prob. 12DQ Ch. 20 - Prob. 13DQ Ch. 20 - Explain how lowering inventory produces better...Ch. 20 - Prob. 15DQ Ch. 20 - Thomas Corporation produces heating units. The...Ch. 20 - Sterling Corporation has an EOQ of 5,000 units....Ch. 20 - Patz Company produces two types of machine parts:...Ch. 20 - Prob. 4CE Ch. 20 - See Cornerstone Exercise 20.4. Fisher Company has...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Melchar Company uses 78,125 pounds of oats each...Ch. 20 - Prob. 9E Ch. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Refer to Exercise 20.10. Assume the economic lot...Ch. 20 - Eyring Manufacturing produces a component used in...Ch. 20 - Hales Company produces a product that requires two...Ch. 20 - Many companies have viewed JIT as a panaceaa...Ch. 20 - Prob. 16E Ch. 20 - Prob. 17E Ch. 20 - Prob. 18E Ch. 20 - The economic order quantity (EOQ) for Part X15 is...Ch. 20 - Prob. 20E Ch. 20 - For the theory of constraints, which of the...Ch. 20 - A dedicated pharmaceutical plant uses the theory...Ch. 20 - Prob. 23P Ch. 20 - Burnett Company produces two types of gears: Model...Ch. 20 - Taylor Company produces two industrial cleansers...Ch. 20 - Prob. 26P Ch. 20 - Calen Company manufactures and sells three...Ch. 20 - Confer Company produces two different metal...Ch. 20 - Pratt Company produces two replacement parts for a...Ch. 20 - Bountiful Manufacturing produces two types of bike...

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Solution Summary: The author explains the economic order quantity (EOQ) approach, which assumes that some inventory must be held for future production.

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Chapter 20 Solutions