Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 12,400 lenses per year, 210 per week, at $39 per len Blitz covers all shipping costs. Vision earns 20% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 265 lenses per week. The following data are available: Relevant ordering costs per purchase order $46.25 Relevant insurance, materials handling, breakage, and so on, per year What is the economic order quantity for Vision? OA. 294 lenses OB. 383 lenses OC. 457 lenses OD. 208 lenses $5.50 C

Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 12,400 lenses per year, 210 per week, at $39 per len Blitz covers all shipping costs. Vision earns 20% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 265 lenses per week. The following data are available: Relevant ordering costs per purchase order $46.25 Relevant insurance, materials handling, breakage, and so on, per year What is the economic order quantity for Vision? OA. 294 lenses OB. 383 lenses OC. 457 lenses OD. 208 lenses $5.50 C

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 6E: 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?
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 Ottiss current inventory policy. Is this the minimum cost? Why or why not?
A supplier sells MF Tires to dealers. The annual demand is approximately1,000 tires. The supplier pays P50 for each tire and estimates that the annualholding cost is 20 percent of the total value of tires. It costs approximatelyP25 to place an order. The supplier currently orders 80 tires per month.Required:a. Calculate ordering, holding, and total inventory costs for thecurrent ordered quantity.b. Determine the EOQ.c. How many orders will be placed per year using the EOQ?d. Calculate ordering, holding, and total inventory costs for the EOQand also determine the change in total inventory cost.
A sport store carries a shoe for men that sells an approximately 3,049 pairs per year. The store purchases the shoes from the manufacturer for $30.2 per pair. The order lead time is 12 days. It costs the store $58 to place and process an order. The annual carrying charge is 24 percent. Assume EOQ model is appropriate and 360 days a year. If the store uses an order quantity of 276 units per order, what is the annual ordering cost? Use at least 4 decimal places.
Vita Company sells glasses. Benz Company manufactures special glass lenses. Vita orders 16,640 lenses per year, 320 per week, at $40 per lens. Benz covers all shipping costs. Vita earns 22% on its cash investments. The purchase-order lead time is 3.0 weeks. Vita sells 315 lenses per week. The following data are available: Relevant ordering costs per purchase order $47.25 Relevant insurance, materials handling, breakage, and so on, per year $5.50 What is the reorder point? a. 1318 lenses b. 1605.0 lenses c. 660 lenses d. 945.0 lenses
Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,400 lenses per year, 200 per week, at $35 per lens. Blitz covers all shipping costs. Vision earns 25% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 225 lenses per week. The following data are available: Relevant ordering costs per purchase order $41.25 Relevant insurance, materials handling, breakage, and so on, per year $ 4.50 What is the economic order quantity for Vision? a. 328 lenses b. 457 lenses c. 161 lenses d. 266 lenses
Tool Mart sells 1,400 electronic water pumps every year. These pumps cost $54.30 each. If annual inventory carrying costs are 12% and the cost of placing an order is $90. What is the firm's EOQ?
A. Genesis Company is a wholesaler. It purchases 60,000 units of Product X per month for sale to retailers. The cost of placing an order is P100. The cost of holding one unit of inventory for one year is P4. Required: 1. Compute the economic order quantity. 2. How many orders would be placed under the EOQ policy? 3. Compute the annual ordering cost for the EOQ. 4. Compute the annual carrying cost for the EOQ. 5. Compute the total inventory-related cost at the EOQ. 6. Previously, the company had been purchasing 5,000 units of product X per order: What is the ordering cost per year under the previous policy? ii. The annual carrying cost? iii. How much money does the company save over the policy of purchasing 5,000 units per order using the EOQ policy? i. B. Kings Company presents the following information: 1. Annual credit sales: P 25,200,000 2. Collection period: 3 months 3. Rate of return: 12% Kings company considers changing its credit term from n/30 to 3/10, 1/30. The following are…
A hardware store sells paint that has a demand of 9,706 gallons per year. The store purchases the paint from a supplier for 11.2 dollars per gallon The unit holding cost per year is 24 percent of the unit purchase cost. while the ordering cost is 175 dollars per order. The paint supplier has a lead time of 10 days. What is the annual ordering cost if the store uses the order quantity of 2,103 gallons per order? Assume EOQ model is appropriate. Use at least 4 decimal places.
A microbrewery purchases malt for production. The supplier charges $35 for delivery (no matter how much is delivered) and $1.20 per gallon. The annual holding cost is 35% of the price per gallon. Usage is 250 gallons/week. a) If the order quantity is 1000 gallons, what is the average inventory? b) If the order quantity is 1500 gallons, how many orders are placed each year? c) What is the EOQ quantity? d) If the order quantity is 2500 gallons, what is the sum of the ordering and holding costs PER GALLON? e) If orders are for the EOQ amount, what is the annual cost of the inventory system as a percentage of the annual purchase cost? f)If orders must be in integer multiples of 1000 gallons, how much should be ordered to minimize ordering and holding costs PER GALLON? g) A 3% purchase price discount is given if orders are for 8000 gallons or more. What would total annual costs (purchasing, ordering, and holding) be using this discount?
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and в D…
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and B D…