Task 1: A fertilizer plant acquires phosphate from a single source. The plant's annual phosphate requirement...
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Task 1: A fertilizer plant acquires phosphate from a single source. The plant's annual phosphate requirement has a normal distribution with a mean of 35,000 metric tons and the standard deviation of 1,200 metric tons. The lead time for phosphate supply is 1 week. To place an order, an administrative employee spends around one hour reviewing the inventory level, preparing the order, tracking the delivery, and updating records. When the delivery is received, it takes roughly two worker hours to unload, inspect, and store the material in a warehouse. The administrative staff member is paid $26 per hour and the warehouse employees are paid $16 per worker hour. Delivery charges are $800 per shipment. The company purchases phosphate at $400 per metric ton. The annual cost of capital is 5%. Other annual costs of holding inventory are estimated to be 5% of the purchase cost. How much should the plant order at a time? What will be the Reorder Point if the desired service level during the lead time is 98%? (Consider 52 weeks in a year for planning. Round answers to 4 decimal places.) [8 Marks] Task 1: A fertilizer plant acquires phosphate from a single source. The plant's annual phosphate requirement has a normal distribution with a mean of 35,000 metric tons and the standard deviation of 1,200 metric tons. The lead time for phosphate supply is 1 week. To place an order, an administrative employee spends around one hour reviewing the inventory level, preparing the order, tracking the delivery, and updating records. When the delivery is received, it takes roughly two worker hours to unload, inspect, and store the material in a warehouse. The administrative staff member is paid $26 per hour and the warehouse employees are paid $16 per worker hour. Delivery charges are $800 per shipment. The company purchases phosphate at $400 per metric ton. The annual cost of capital is 5%. Other annual costs of holding inventory are estimated to be 5% of the purchase cost. How much should the plant order at a time? What will be the Reorder Point if the desired service level during the lead time is 98%? (Consider 52 weeks in a year for planning. Round answers to 4 decimal places.) [8 Marks]
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Step 12 Answer Given that Annual Demand D 35000 Std deviation 1200 Lead time 7 days Ordering ... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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