Company has daily demand for ball bearings of 40 a day for each of the 250 working days (50 weeks) of the year. The ball bearings are purchased from a local supplier for $2 each. The cost of placing an order is $64 per order, regardless of the size of the order. The inventory holding costs, expressed as a percentage of inventory purchase price, is 25% per year. What is the economic order quantity (EOQ).

Company has calculated the following in relation to its inventories.

Buffer inventory level 50 units

Reorder size 250 items

Fixed order costs $50 per order

Cost of holding onto one item pa $1.25 per year

Annual demand 10,000 items

Purchase price $2 per item

What are the total inventory related costs for a year.

Company has annual credit sales of $4,500,000 and on average customers take 60 days to pay, assuming a 360-day year. As a result, company has a trade receivables balance of $750,000. The company relies on an overdraft to finance this at an annual interest rate of 10%. Company is considering offering an early settlement discount of 1% for payment in 30 days. It expected that 25% of its customers (representing 35% of the annual credit sales figure) will pay in 30 days in order to obtain the discount. If company introduces the proposed discount, what will be the NET impact.

Company is considering whether to factor its sales invoices. A factor has offered company a nonrecourse package at a cost of 1.5% of sales and an admin fee of $6,000 per year. Bad debts are currently 2% of sales per year and sales are $1.5m per year. What is the cost of the package of company.

company has budgeted that sales will be $300,100 in January 20X2, $501,500 in February, $150,000 in March and $320,500 in April. Half of sales will be credit sales. 80% of receivables are expected to pay in the month after sale, 15% in the second month after sale, while the remaining 5% are expected to be bad debts. Receivables who pay in the month after sale can claim a 4% early settlement discount. What level of sales receipts should be shown in the cash budget for March 2012.

A company needs $150,000 each year for regular payments. Converting the company's short-term investments into cash to meet these regular payments incurs a fixed cost of $400 per transaction. These short-term investments pay interest of 5% per year, while the company earns interest of only 1% per year on cash deposits.According to the Baumol Model, what is the optimum amount of short-term investments to convert into cash in each transaction.