Creative Equipment, based in Waterloo, Ontario, manufactures virtual reality goggles and purchases one of the components...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Creative Equipment, based in Waterloo, Ontario, manufactures virtual reality goggles and purchases one of the components used in the goggles from a supplier in Burnaby, B.C. The company uses 5,000 of these components per year at a cost of $80 each. The components are used evenly in the production process throughout a 360-day production year. The company estimates that it costs $10 to place a single purchase order and about $40 to carry each component in inventory for a year. Delivery from the supplier generally takes two days, but it can take as many as six days. The days of delivery time and the percentage of their occurrence are shown in the following tabulation: Delivery Time (Days) 2 3 4 5 6 Required: 1. Compute the EOQ. EOQ Percentage of Occurrence 75 10 Safety stock Reorder point components 5 5 5 100 2. Assume that the company is willing to assume a 10% risk of being out of stock. What is the safety stock? The reorder point? components components 3. Assume that the company is willing to assume only a 5% risk of being out of stock. What is the safety stock? The reorder point? Safety stock Reorder point 4. Assume a 5% stock-out risk as stated in (3) above. What is the total cost of ordering and carrying inventory for one year? Total cost Carrying cost of inventory components components 5. Refer to the original data. Assume that the company decides to adopt JIT purchasing policies. This change allows the company to reduce its cost of placing a purchase order to only $2.50. Compute the new EOQ. EOQ components Creative Equipment, based in Waterloo, Ontario, manufactures virtual reality goggles and purchases one of the components used in the goggles from a supplier in Burnaby, B.C. The company uses 5,000 of these components per year at a cost of $80 each. The components are used evenly in the production process throughout a 360-day production year. The company estimates that it costs $10 to place a single purchase order and about $40 to carry each component in inventory for a year. Delivery from the supplier generally takes two days, but it can take as many as six days. The days of delivery time and the percentage of their occurrence are shown in the following tabulation: Delivery Time (Days) 2 3 4 5 6 Required: 1. Compute the EOQ. EOQ Percentage of Occurrence 75 10 Safety stock Reorder point components 5 5 5 100 2. Assume that the company is willing to assume a 10% risk of being out of stock. What is the safety stock? The reorder point? components components 3. Assume that the company is willing to assume only a 5% risk of being out of stock. What is the safety stock? The reorder point? Safety stock Reorder point 4. Assume a 5% stock-out risk as stated in (3) above. What is the total cost of ordering and carrying inventory for one year? Total cost Carrying cost of inventory components components 5. Refer to the original data. Assume that the company decides to adopt JIT purchasing policies. This change allows the company to reduce its cost of placing a purchase order to only $2.50. Compute the new EOQ. EOQ components
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Hazel plc produces one of the components used in the manufacture of car bumpers. The production manager is keen on obtaining modern equipment and he has come to you, the finance director, with...
-
Shaw Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.80 per unit. Shaw...
-
McCall Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $14.10 per unit. McCall...
-
Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her...
-
Bank managers should always seek the highest return possible on their assets. Is this statement true, false, or uncertain? Explain your answer.
-
Phil owns a ranch business and uses four-wheelers to do much of his work. Occasionally, though, he and his boys will go for a ride together as a family activity. During year 1, Phil put 765 miles on...
-
There is a market for bets on the outcome of a coin toss. The possible outcomes are heads, tails, and edge. There are three assets traded in that market: Asset A pays \(\$ 1\) independent of the...
-
Ellis Co. issued bonds with a face value of $150,000 on January 1, 2013. The bonds had a 6 percent stated rate of interest and a five-year term. The bonds were issued at face value. Required a. What...
-
A dataset is given below. Calculate the odds ratio to assess the relationship between visiting a petting zoo and becoming infected by E. coli. Interpret the result. Got Sick (Cases) Did Not Get Sick...
-
ALei Industries has credit sales of $150 million a year. ALeis management reviewed its credit policy and decided that it wants to maintain an average collection period of 40 days. a. What is the...
-
Conduct a search using the Internet or published corporate annual reports to identify the corporate strategy of a company in which you might be interested in investing. Learn about the firm's product...
-
You recently came across the following headlines: i. Private schools cut tuition and fail to reach enrollment goals ii. University of California raises tuition on out-of-state students, still at...
-
A study on student loan default rates by the Brookings Institute found an interesting correlation. Generally students that needed to borrow more money to attend a four-year institution were less...
-
Sapphire Ltds ending inventory was assigned a cost of $55 200 by way of a physical inventory count on 31 December 2019. An audit of the companys records revealed the following information. Ignore...
-
You and your roommate both enjoy Blue Bunny cookie dough ice cream. At the campus store you can buy a pint of ice cream for $3. In your last visit to the store, you noticed Blue Bunny ice cream was...
-
You and your roommate are in a dilemma. You are both taking economics and accounting and have an economics exam tomorrow afternoon. Youre worried that you wont have enough study time and are debating...
-
CORP. declared P1,800,000 cash dividends to its preference and ordinary shareholders out of its profits in 2018. No dividends have been declared since 2015. FIVE's shareholders' equity before...
-
A circular concrete shaft liner with Youngs modulus of 3.4 million psi, Poissons ratio of 0.25, unconfined compressive strength 3,500 psi and tensile strength 350 psi is loaded to the verge of...
-
What is the relationship between the results of tests of controls and substantive testing?
-
North West Paper Ltd. (North West) provides cardboard, paper, and plastic packaging materials to a large number of manufacturers and distributors in all provinces. The cardboard and paper division is...
-
Fellowes and Associates Chartered Accountants is a successful mid-tier accounting firm with a large range of clients across Canada. In 2011, Fellowes and Associates gained a new client, Health Care...
-
Test the overall significance of a regression model and identify the components of this test from your computer output.
-
Identify the sample.
-
Based on the strategy, what type of sampling technique will be used to identify the sample? a. Why did you choose this type of technique?
Study smarter with the SolutionInn App