Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.
Manis Berhad is a company that produces children toys for domestic and overseas market. One of the main raw materials used in the production is the synthetic rubber and the source of the material is from the country of the United States of America. There is a lead time of two weeks between the placing of an order and delivery of the goods to the factory plant since the raw materials is ordered through shipment. The production manager of the company has confirmed that the factory works for 50 weeks in a year. The average usage of synthetic rubber is 10,000 units per week. The average unit price of the synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the purchase price including the insurance costs and financing costs. The cost of ordering the synthetic rubber is fixed at RM200 per order. The company is considering a stock management system based on the economic order quantity (EOQ) model. Besides, the Managing Director suggested that the company should source supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that the stockholdings of the company should be reduced since the assembly department needed more space. Required: Determine the optimum order level of stock for Manis Berhad. (Round your answers to the nearest kg). а.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please solve all the questions
Transcribed Image Text:Manis Berhad is a company that produces children toys for domestic and overseas market.
One of the main raw materials used in the production is the synthetic rubber and the source of
the material is from the country of the United States of America. There is a lead time of two
weeks between the placing of an order and delivery of the goods to the factory plant since the
raw materials is ordered through shipment. The production manager of the company has
confirmed that the factory works for 50 weeks in a year.
The average usage of synthetic rubber is 10,000 units per week. The average unit price of the
synthetic rubber is RM42 per kg. The holding cost for the inventory is 40 percent of the
purchase price including the insurance costs and financing costs. The cost of ordering the
synthetic rubber is fixed at RM200 per order.
The company is considering a stock management system based on the economic order quantity
(EOQ) model. Besides, the Managing Director suggested that the company should source
supplies of synthetic rubber from many suppliers, locally and overseas. He also suggested that
the stockholdings of the company should be reduced since the assembly department needed
more space.
Required:
Determine the optimum order level of stock for Manis Berhad. (Round your answers
to the nearest kg).
а.
Transcribed Image Text:b.
Determine how many orders that has to be placed in a year.
с.
Determine the inventory order point.
d.
Calculate the total costs of inventory for Manis Berhad if ordering at EOO.
The supplier of Manis Berhad offers a 1% discount for any orders of 20,000 kg of rubber
or more in one order. Evaluate whether it would be beneficial for the company to take
the quantity discount offered by the supplier. Show all the relevant calculations.
е.
f.
The Managing Director suggested that the stockholdings of the company should be
reduced since the assembly department needed more space. He also suggested that the
company should source supplies from many suppliers locally and overseas.
Do you agree with his suggestion? Briefly explain your opinion.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education