EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 18, Problem 19P
a)
Summary Introduction
To calculate: The placing time of the orders.
b)
Summary Introduction
To calculate: The average inventory and yearly carrying costs.
c)
Summary Introduction
To calculate: The reorder point.
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The ABC Company consumes inventory of 67,500 units of components per year . The carrying cost per unit is RO 1.50 . The fixed order cost is RO 25 per order . The production planning is 365 - day year .
a . What is the Economic Order Quantity ( EOQ ) ? Interpret .
b . Calculate and interpret the optimal number of orders to be placed.
c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order? Interpret .
Auto Zone purchases replacement brake fluid reservoirs directly from the manufacturer. Demand is roughly 1000 units per month over the year. Ordering costs are $25 per order and the reservoirs are $10.00 per unit. Annual holding costs are 20% of the value of the inventory. There are 311 working days per year and the lead time is 5 days. Address the following inventory management issues that need to be resolved. a) What is the EOQ for this component? b) What is the reorder point? c) What is the cycle time? d) What are the total annual holding and ordering costs associated with your recommended EOQ?
A store sells a product that has the annual demand of 16,156 units. It purchases the product from
supplier A for
$74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost.
The cost to
place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time
of 7 days.
The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total
annual
inventory and purchase cost for the store?
Use at least 4 decimal places.
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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