You are running the inbound transportation for Waterville Valley Chairs (WVC), a manufacturer of custom wooden...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are running the inbound transportation for Waterville Valley Chairs (WVC), a manufacturer of custom wooden chairs. You have several dozen vendors that provide you a range of materials to include wood, paint, fabrics, cushions, etc. One of the vendors, Loon Hardware, provides you metal components, fittings, and screws. You are trying to determine how to arrange for the transportation from their distribution center to your plant center. Loon Hardware will deliver as many pallets of product as you wish with 2 weeks of lead time with essentially no variability. Loon already has this material ready to ship so that the whole 2 weeks of lead time is loading and transit. Under this contract, you take ownership of the product only when Loon delivers it to your plant. You do not own or incur any inventory costs on this item until it arrives at your dock under this option. They are charging you $500 per pallet. You think this is too high and you are exploring options for taking over the management of the transportation. In the United States, this is called converting from "pre-paid" (where the supplier pays for and manages the transportation) to "collect" (where the buyer pays for and manages the transportation). This analysis, then is often called a "Pre-paid to Collect Conversion," but we know that it is just a different word for mode selection. WVC uses a continuous review inventory policy and Q has been set to 6 pallets. You always order in full pallet quantities. Demand for the product is Normally distributed with an average of 1.5 pallets per week and a weekly standard deviation of 0.25 pallets. The value of a pallet of product from Loon Hardware is $1750 and you use a 15% holding charge. You have set a CSL of 99% and you use a 48 week year for planning purposes. Your company's policy is to NOT include the cost of transportation in product costs when calculating inventory costs. That is, regardless of what you pay for transportation per pallet, the value per pallet, c, is $1750. Do not include transport costs as part of this value, c, when calculating inventory costs. Please enter all your numerical answers with 4 significant figures. NOTE: Answer the following questions assuming that Loon Hardware handles all of the transportation. Part 1 0.0/1.0 point (graded) What is your expected Cycle Stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. Submit You have used 0 of 2 attempts Part 2 0.0/1.0 point (graded) What is your reorder point, s, for an (s,Q) system? Enter an integer value of pallets and round your answer UP to the nearest integer. Submit Save You have used 0 of 2 attempts Save Part 3 0.0/1.0 point (graded) Using the reorder point, s, as given in the solution to Part 2 above, what is your expected cost of safety stock? Enter an integer value of dollars and round your answer UP to the nearest integer. Submit You have used 0 of 2 attempts Part 4 0.0/1.0 point (graded) What is your expected cost of pipeline inventory? Enter an integer value of dollars and round your answer UP to the nearest integer. Submit Save You have used 0 of 2 attempts Save Part 5 0.0/1.0 point (graded) What is your expected annual transportation cost that Loon will charge you? Enter an integer value of dollars and round your answer UP to the nearest integer. Remember, to use a 48 week year for planning purposes. Submit You have used 0 of 2 attempts Save You are running the inbound transportation for Waterville Valley Chairs (WVC), a manufacturer of custom wooden chairs. You have several dozen vendors that provide you a range of materials to include wood, paint, fabrics, cushions, etc. One of the vendors, Loon Hardware, provides you metal components, fittings, and screws. You are trying to determine how to arrange for the transportation from their distribution center to your plant center. Loon Hardware will deliver as many pallets of product as you wish with 2 weeks of lead time with essentially no variability. Loon already has this material ready to ship so that the whole 2 weeks of lead time is loading and transit. Under this contract, you take ownership of the product only when Loon delivers it to your plant. You do not own or incur any inventory costs on this item until it arrives at your dock under this option. They are charging you $500 per pallet. You think this is too high and you are exploring options for taking over the management of the transportation. In the United States, this is called converting from "pre-paid" (where the supplier pays for and manages the transportation) to "collect" (where the buyer pays for and manages the transportation). This analysis, then is often called a "Pre-paid to Collect Conversion," but we know that it is just a different word for mode selection. WVC uses a continuous review inventory policy and Q has been set to 6 pallets. You always order in full pallet quantities. Demand for the product is Normally distributed with an average of 1.5 pallets per week and a weekly standard deviation of 0.25 pallets. The value of a pallet of product from Loon Hardware is $1750 and you use a 15% holding charge. You have set a CSL of 99% and you use a 48 week year for planning purposes. Your company's policy is to NOT include the cost of transportation in product costs when calculating inventory costs. That is, regardless of what you pay for transportation per pallet, the value per pallet, c, is $1750. Do not include transport costs as part of this value, c, when calculating inventory costs. Please enter all your numerical answers with 4 significant figures. NOTE: Answer the following questions assuming that Loon Hardware handles all of the transportation. Part 1 0.0/1.0 point (graded) What is your expected Cycle Stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. Submit You have used 0 of 2 attempts Part 2 0.0/1.0 point (graded) What is your reorder point, s, for an (s,Q) system? Enter an integer value of pallets and round your answer UP to the nearest integer. Submit Save You have used 0 of 2 attempts Save Part 3 0.0/1.0 point (graded) Using the reorder point, s, as given in the solution to Part 2 above, what is your expected cost of safety stock? Enter an integer value of dollars and round your answer UP to the nearest integer. Submit You have used 0 of 2 attempts Part 4 0.0/1.0 point (graded) What is your expected cost of pipeline inventory? Enter an integer value of dollars and round your answer UP to the nearest integer. Submit Save You have used 0 of 2 attempts Save Part 5 0.0/1.0 point (graded) What is your expected annual transportation cost that Loon will charge you? Enter an integer value of dollars and round your answer UP to the nearest integer. Remember, to use a 48 week year for planning purposes. Submit You have used 0 of 2 attempts Save
Expert Answer:
Answer rating: 100% (QA)
SOLUTION Part 1 The expected cycle stock holding cost can be calculated as follows h 015 c 015 1750 ... View the full answer
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
Posted Date:
Students also viewed these general management questions
-
K Find the 100th and the nth term for each of the following sequences. a. 1, 6, 11, 16, b. 60, 100, 140, c. 1, 2, 4, . d. 9, 94, 97, 910 e. 173+5.328, 173+6.328, 173+7.328. c. The 100th term of 1, 2,...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
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...
-
Write a recursive program to draw plasma clouds, using the method suggested in the text.
-
A mild-steel cylindrical billet, 25-cm in diameter, is to be raised to a minimum temperature of 760?C by passing it through a 6-m long strip type furnace. If the furnace gases are at 1538?C and the...
-
Prepare as a general journal the commencement of a petty cash imprest float of $500.00. In the balance sheet, what is the classification of the accounts affected by the establishment of the petty...
-
Tyler Companys ASC 932-235 disclosures included the following information: REQUIRED: Using the information for Tyler Company in problems 13, 14, and 15 and in this problem: a. Compute the value of...
-
(Multiple-step and Single-step) Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The...
-
Data Wrangling Versus ETL On the basis of users, please differentiate extraction, transformation, and loading ( ETL ) from data wrangling. Also, mention which tool a business analyst would use: an...
-
B 9 50 01 02 03 04 05 06 107 108 109 110 111 112 113 114 115 116 117 40. Based on the information on the "Bank Reconciliation" sheet prepare the journal entry required to increases cash. 41. Based on...
-
The following records were taken from the books of the Company and its branch on December 31, 2021: Expenses incurred by the HO is P382,000 and branch incurred P101,500. In 2021, home office billed...
-
Here are today's prices of 6-month call options on stock XYZ. The current price of the stock, S(t), is $50. CALL CALL CALL Expiration 6 mths 6 mths 6 mths Strike $50.00 $60.00 $70.00 Option price...
-
You are planning to save $2,798 at the end of each year for the next 19 years. Assuming you earn a 5.1% return, how much will you have at the end of the 19 years?
-
A document that pledges title to property as security for a loan. Select one: a. Reacquisition Price b. Mortgage c. Market Rate d. Premium on Bonds
-
Q6. What's the present value of a perpetutity that pays $1,524 per year if the aprropriate interest rate is 5.3%?Round answer to 2 decimal places?
-
Calculate AB InBev's expected abnormal NOPATs between 2009 and 2018 based on the information. How does the implied trend in abnormal NOPAT compare with the general trends in the economy? Assume that...
-
Assume x and y are functions of t. Evaluate dy/dt for 3xy-7x+5y^3= -215 dx/dt =-10, x=5, and y=-3
-
Identify the most stable compound:
-
Suppose Saskatoon Honda had the following data for the years operations. The president of the dealership has long regarded the markup on material and labour for the parts and service activity as the...
-
The Magnatto Company manufactures electric drills. Material is introduced at the beginning of the process in the assembly department. Conversion costs are applied uniformly throughout the process. As...
-
A cable television network is considering cancelling the program Toronto Lawyer because it is watched by only 2.3 percent of the audience in its Monday evening time slot. It would be replaced by...
-
Suppose that your college or university decides to evaluate its undergraduate program to determine how successful it is at educating students. How should the output of a university be measured? In...
-
Suppose that your local school district wants to implement a program to assess teacher quality and success and to use that assessment as part of the evaluation of teachers that may affect their...
-
Explain why it may be necessary for state governments to begin to replace unit (per gallon) gasoline excise taxes with an alternative tax or different revenue source. Make the case for a user fee...
Study smarter with the SolutionInn App