EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 18, Problem 17P
a)
Summary Introduction
To calculate: The EOQ.
b)
Summary Introduction
To calculate: The total yearly cost of inventory for the policy.
c)
Summary Introduction
To calculate: The frequency of placing the order.
d)
Summary Introduction
To calculate: The ordering, carrying, and inventory costs.
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Quick-Copy Duplicating Company uses 110,000 reams of standard-size paper a year at its
various duplicating centers. Its current paper supplier charges $2.00 per ream. Annual inventory
carrying costs are 15 percent of inventory value. The costs of placing and receiving an order of
paper are $41.25. Assuming that inventory replenishment occurs virtually instantaneously,
determine the following:
a. The firm's EOQ
b. The total annual inventory costs of this policy
c. The optimal ordering frequency
d. Compute and plot ordering costs, carrying costs, and total inventory costs for order quantities
of 2,000, 4,000, 5,000, 5,500, 6,000, 7,000, and 9,000 reams. Connect the points on each
function with a smooth curve, and determine the EOQ from the graph (and the table used in
constructing the graph).
The following information is given to you about a manufacturing business:
The days sale of inventory, DSI - 44 days
The days sale outstanding. DSO = 38 days
The days payables outstanding. DPO = 53 days
The markup policy aplies 20% on cost to determine the sale price of a piece of inventory.
All sales are credit sales; vendors also supply on credit basis. The operating capital is borrowed at an interest rate of 37% and the
annual days of operations is 346.
(1) The cash conversion cycle, CCC -
(2) The annual rate of return on capital AFTER interest is
days (Round TWO places of decimal)
% (Round TWO places of decimal)
A company wishes to establish an EOQ for an item for which the annual demandis $800,000, the ordering cost is $32, and the cost of carrying inventory is 20%.Calculate the following:a. The EOQ in dollars.b. Number of orders per year.c. Cost of ordering, cost of carrying inventory, and total cost.d. How do the costs of carrying inventory compare with the costs of ordering?
Chapter 18 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 18 - Prob. 1QTDCh. 18 - Prob. 2QTDCh. 18 - Prob. 3QTDCh. 18 - Prob. 4QTDCh. 18 - Prob. 5QTDCh. 18 - Prob. 6QTDCh. 18 - Prob. 7QTDCh. 18 - Prob. 8QTDCh. 18 - Prob. 9QTDCh. 18 - Prob. 10QTD
Ch. 18 - Prob. 11QTDCh. 18 - Prob. 12QTDCh. 18 - Prob. 13QTDCh. 18 - Prob. 14QTDCh. 18 - Prob. 15QTDCh. 18 - Prob. 16QTDCh. 18 - Prob. 17QTDCh. 18 - Prob. 18QTDCh. 18 - Prob. 19QTDCh. 18 - Prob. 20QTDCh. 18 - Prob. 21QTDCh. 18 - Prob. 22QTDCh. 18 - Prob. 1PCh. 18 - Prob. 2PCh. 18 - Prob. 3PCh. 18 - Prob. 4PCh. 18 - Prob. 5PCh. 18 - Prob. 6PCh. 18 - Prob. 7PCh. 18 - Prob. 8PCh. 18 - Prob. 10PCh. 18 - Prob. 11PCh. 18 - Prob. 12PCh. 18 - Prob. 13PCh. 18 - Prob. 14PCh. 18 - Prob. 15PCh. 18 - Prob. 16PCh. 18 - Prob. 17PCh. 18 - Prob. 18PCh. 18 - Prob. 19PCh. 18 - Prob. 20PCh. 18 - Prob. 21P
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