Figure 1Mrs. Brown's Bagel Company manufactures specialty bagels. The company buys flour in50-pound bags that cost GHS25 each. The company uses 10,000 bags per year, and usage occursevenly throughout the year.The average cost to carry a 50-pound bag in inventory per year is GHS4, and the cost to place anorder is GHS10.The company works 250 days per year.20. Refer to Figure 1. If Brown's lead time is four working days, the average rate of usage is 40 bagsper day, and the company carries a safety stock of 20 bags, the reorder point would bea. 180 bags.b. 140 bags.c. 160 bags.d. 100 bags.

Reorder Point = Lead Time Demand x Safety stock Lead time demand = Average daily uses x Lead…

20. Refer to Figure 1. If Brown's lead time is four working days, the average rate of usage is 40 bags per day, and the company carries a safety stock of 20 bags, the reorder point would be a. 180 bags. b. 140 bags. c. 160 bags. d. 100 bags.

20. Refer to Figure 1. If Brown's lead time is four working days, the average rate of usage is 40 bags per day, and the company carries a safety stock of 20 bags, the reorder point would be a. 180 bags. b. 140 bags. c. 160 bags. d. 100 bags.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...

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Question

Figure 1
Mrs. Brown's Bagel Company manufactures specialty bagels. The company buys flour in
50-pound bags that cost GHS25 each. The company uses 10,000 bags per year, and usage occurs
evenly throughout the year.
The average cost to carry a 50-pound bag in inventory per year is GHS4, and the cost to place an
order is GHS10.
The company works 250 days per year.
20. Refer to Figure 1. If Brown's lead time is four working days, the average rate of usage is 40 bags
per day, and the company carries a safety stock of 20 bags, the reorder point would be
a. 180 bags.
b. 140 bags.
c. 160 bags.
d. 100 bags.

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