Maria Company has an average age of inventory of 120 days; average collection period of 90 days and average payment period of 100 days. The firm's annual sales are $10 million. (a) Calculate the company's operating cycle and cash conversion cycle. (b) Calculate the amount of resources needed to be invested to support its cash conversion cycle.(c) The company uses 10,000 units of product annually. The cost of ordering is $50 per order and the carrying cost is $3 per year.

(i) Calculate the EOQ. (ii) Calculate the total cost of inventory.

(d) Explain the concepts "reorder point" and "safety stock" (no calculation is required)

Answer rating: 100% (QA)

a To calculate the companys operating cycle and cash conversion cycle we need to use the formula Ope... View the full answer