Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory 8 times a year, and maintains 308 units of its inventory as safety stock. Its inventory carrying cost is RM1.95 per unit per year, whereas its ordering cost is RM46.20 per order. [15 marks] [A] What is the firm's total ordering cost of inventory under its present inventory management arrangement? [1.5 marks] [B] What is the firm's order quantity under its present inventory management arrangement? [1.5 marks]] [C] What is the firm's total carrying cost of inventory under its present inventory management arrangement? [2.5 marks] [D] What is the firm's re-order point- at what level of inventory should the firm re-order for new supply of inventory- under its present inventory management arrangement? [0.5 mark] [E] If the firm adopts the EOQ model of inventory management, what should the order quantity be? [3 marks] [F] If the supplier takes four days to deliver the order of inventory, and you advise the firm to reduce its safety stock to just a week's demand for inventory, what should the firm's re-order point be, under the proposed inventory management arrangement? (Assume 52 weeks a year and 7 days a week) [2 marks] [G] What is the savings in the total inventory (both carrying and ordering) costs arising from switching from the present arrangement to the proposed (including EOQ) arrangement? [3] marks] Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory 8 times a year, and maintains 308 units of its inventory as safety stock. Its inventory carrying cost is RM1.95 per unit per year, whereas its ordering cost is RM46.20 per order. [15 marks] [A] What is the firm's total ordering cost of inventory under its present inventory management arrangement? [1.5 marks] [B] What is the firm's order quantity under its present inventory management arrangement? [1.5 marks]] [C] What is the firm's total carrying cost of inventory under its present inventory management arrangement? [2.5 marks] [D] What is the firm's re-order point- at what level of inventory should the firm re-order for new supply of inventory- under its present inventory management arrangement? [0.5 mark] [E] If the firm adopts the EOQ model of inventory management, what should the order quantity be? [3 marks] [F] If the supplier takes four days to deliver the order of inventory, and you advise the firm to reduce its safety stock to just a week's demand for inventory, what should the firm's re-order point be, under the proposed inventory management arrangement? (Assume 52 weeks a year and 7 days a week) [2 marks] [G] What is the savings in the total inventory (both carrying and ordering) costs arising from switching from the present arrangement to the proposed (including EOQ) arrangement? [3] marks]
Expert Answer:
Answer rating: 100% (QA)
A The firms total ordering cost can be calculated using the following formula Total Ordering Cost Annual DemandOrder Quantity x Ordering Cost per Orde... View the full answer
Related Book For
Basic Finance An Introduction to Financial Institutions Investments and Management
ISBN: 978-1111820633
10th edition
Authors: Herbert B. Mayo
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Youve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Would individual mandates for health insurance be more or less burdensome to the poor than employer mandates? Would lower-income groups be wise to favor one plan over the other?
-
Briefly explain how each of the following influences the tensile or yield strength of a semicrystalline polymer and why: (a) Molecular weight (b) Degree of crystallinity (c) Deformation by drawing...
-
If the diatomic gas of Problem 3.47 were nonideal at the pressures in the problem and attractive forces dominate, qualitatively describe how the fi nal temperature in tank A would change from the...
-
Watch Bettina Warburg's TED Talk titled "How the Blockchain Will Radically Transform the Economy," dated June 2016 at https://www.ted.com/talks/bettina_warburg_...
-
Hilliard Electronics produces specially coded computer chips for laser surgery in 64MB, 256MB, and 512MB sizes. (1MB means that the chip holds 1 million bytes of information.) To produce a 64MB chip...
-
1. Two projects being considered are mutually exclusive and have the following cash flows: Year Project A Project B 012345 -$50,000 -$50,000 15.625 0 15.625 15,625 15,625 15,625 0 99,500 If the...
-
Canada produces steel domestically and also imports it from abroad. Assume that the world market for steel is competitive and that Canada is a small producer, unable to affect the world price. Since...
-
Jasmine Company provided the following sales information for the month of December: November December Budget Cash sales $ 20,500.00 $ 40,000.00 Actual Credit sales 100,000.00 130,000.00 Total sales...
-
Activity - based costing ( ABC ) is a costing method that allocates costs to specific activities, rather than departments or products. Discuss the concept of activity - based costing and its...
-
Self-leadership is an indispensable skill for today's healthcare leaders. A leader's ability to effectively govern their emotions, communication, and motivation provides insight into their capacity...
-
What is the overall bus width for a system that uses triple channel memory? give reason also
-
Evaluate strategic marketing issues in business environments from the following organizations: 1. Grab Transportation. Explain in detail with suitable examples.
-
Find the solution of the equation coth x = a, assuming that a > 1. Express the result in terms of elementary functions of a. [Hint: The result should have the form x = f(a), where f(a) is a specific...
-
A copper wire that has been heated to 520C for pliability is plunged into 350 ml of water at 18C. The final temperature of the copper and water bath is 31 C. Find the mass of the copper wire....
-
The outer loop controls the number of students. Note that the inner loop of this program is always executed exactly three times, once for each day of the long weekend. Modify the code so that the...
-
ELLA T., Inc. has annual sales of 5,000 units; management decides to establish the EOQ model. The firm has two possible suppliers: Supplier A Shipping costs $1,000 Per-unit carrying costs $74...
-
Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at $40 a share. She buys on margin and the broker charges interest of 10 percent on the loan. a. If the margin requirement is 55...
-
TSC, Inc. sells for $26 and pays an annual per share dividend of $1.30, which you expect to grow at 12 percent. What is your expected return on this stock? What would be the expected return if the...
-
What are the sources of monopoly power?
-
Describe and explain how a firm can increase its profits through price discrimination.
-
What is a monopoly?
Study smarter with the SolutionInn App