Liberty Celebrations, Inc. manufactures a line of flags. The annual demand for its flag display is estimated to be 100.000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is s50. There an no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. (Note: Setup cost = Order cost) The number of production runs per year of the flag displays that would minimize the sum of carrying costs and set-up costs for the coming year is Select one: a. 30 b. 40 C. 20 O d.50

Liberty Celebrations, Inc. manufactures a line of flags. The annual demand for its flag display is estimated to be 100.000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is s50. There an no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. (Note: Setup cost = Order cost) The number of production runs per year of the flag displays that would minimize the sum of carrying costs and set-up costs for the coming year is Select one: a. 30 b. 40 C. 20 O d.50

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 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Liberty Celebrations, Inc. manufactures a line of flags. The annual demand for its flag display is estimated to be 100.000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is s50. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. (Note: Setup cost = Order cost) If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is Select one: a. $2,667. b. $1,333. C. $1,600. d. s2.000.
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,300 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $74. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number).
Advance Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Advance Auto’s generator production operation, which is operated at a constant rate will require 1000 components per month throughout the year (12,000 units annually). Assume the ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Advance Auto has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: What is the EOQ for this component? What is the reorder point? What is the cycle time? What are the total annual holding and ordering costs associated with your recommended EOQ?
Patay-Buhay Corporation produces push-button switches used in the manufacture of electric fans. For the year 200B, the sales of electric fans have been forecasted at 800,000 units. Each unit of electric fans requires 4 pieces of push-button switches. Patay-Buhay regularly supplies 60% of the push-button switches used in the production of new electric fans. In addition, a replacement parts market also exists. Over the past 5 years, the sales of the replacement push-button switches have increased per year by 20% of the preceding year’s sales. In 200A, Patay-Buhay sold 150,000 pieces of push-button replacement switches. The trend is expected to continue in 200B. The company sells the push-button switches for P10 per piece in both markets. The budgeted sales revenue based on the expected number of pieces of push-button switches to be sold in 200B is a. P19,200,000. b. P20,700,000 c. 21,000,000 d. P2,100,000
A plastic manufacturing company that makes four major products seeks to expand its operations in the coming year. At the beginning of the financial year, the company must decide on which of four new machines A, B, or C to purchase to be able to meet total annual demand. Each machine operates 14 hours a day, 360 days a year. Machine A costs GH¢43,000, machine B costs GH¢37,500 and machine C costs GH¢75,000. The following product forecasts and processing times have been projected: Demand, units/year Processing times per Unit (Minutes) Product Machine A Machine B Machine CPenholders 16,000 5 3 6Bowls 14,000 4 3 5Cups 6,000 6 5 7Carrier Bags 24,000 3…
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. REQUIRED: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottis’s current inventory policy. Is this the minimum cost? Why or why not?
Western Jeans Co. has an annual plant capacity of 2,000,000 units, and current production is 1,920,000 units. Monthly fixed costs are $400,000, and variable costs are $9 per unit. The present selling price is $15 per unit. On July 6 of the current year, the company received an offer from Childs Company for 50,000 units of the product at $13 each. Childs Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Western Jeans Co. Question Content Area a. Prepare a differential analysis dated July 6 on whether to reject (Alternative 1) or accept (Alternative 2) the Childs order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential AnalysisReject (Alt. 1) or Accept (Alt. 2) OrderJuly 6 Line Item Description Reject Order(Alternative 1) Accept Order(Alternative 2) Differential Effects(Alternative 2) Revenues $Revenues…
A plastic manufacturing company that makes four major products seeks to expand its operationsin the coming year. At the beginning of the financial year, the company must decide on which offour new machines A, B, or C to purchase to be able to meet total annual demand. Each machineoperates 14 hours a day, 360 days a year. Machine A costs GH¢43,000, machine B costsGH¢37,500 and machine C costs GH¢75,000. The following product forecasts and processing times have been projected: Demand, units/year Processing times per Unit (Minutes) Product Machine A Machine B Machine CPenholders 16,000 5 3 6Bowls 14,000 4 3 5Cups 6,000 6 5 7Carrier Bags 24,000 3…
Chen's Chemicals, a firm that produces industrial chemicals, uses 26,000 gallons of a particular solvent per year on a continuous basis. The product has a fixed cost of $360 per order, and its carrying cost is $4.00 per gallon per year. It takes 6 days to receive a shipment after an order is placed, and the firm wishes to hold 16 days' usage in inventory as a safety stock. What is the Economic Ordering Quantity (EOQ)? Assume a 365-day year. Give your answer in gallons rounded to the nearest whole number. Do not include comma separators in your answer.
Jumbo Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. The firm uses the item at a constant rate each year. Calculate the Economic Order Quantity. And assume that Jumbo Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Jumbo desires to keep a safety stock of 4 units. Calculate the reorder point.
G Corporation produces push-button switches used in the manufacture of electric fans. For the year 200B, the sales of electric fans has been forecasted at 800,000 units. Each unit of electric fans requires 4 pieces of push-button switches. Porterte regularly supplies 60% of the push-button switches used in the production of new electric fans. In addition, a replacement parts market also exists. Over the past 5 years, the sales of the replacement push-button switches have increased per year by 20% of the preceding yearâ s sales. In 200A, Porterte sold 150,000 pieces of push-button replacement switches. The trend is expected to continue in 200B. The company sells the push-button switches for P10 per piece in both markets. Find the budgeted sales revenue based on the expected number of pieces of push-button switches to be sold in 200B?