P14-6: a-d

CHAPTER 14 Working Capital and Current Assets Management 631 Determine the EOQ if ( 1 ) the conditions stated above hold, (2) the order cost is a. S1 rather than $85, and (3) the order cost is S55 but the carrying cost is $0.01. b. What do your answers illustrate about the EOQ model? Explain EOQ, reorder point, and safety stock Alexis Company uses 800 units of a product year on a continuous basis. The product has a fixed cost of S50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock a. Cakculate the EOQ h. Determine the average level of inventory. (Note: Use a 365-day year to cakculate daily usage.) c Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. Explain. Personal Finance Problem Marginal costs Jimmy Johnson is interested in buying a new Jeep SUV. Two options are available, a V-6 model and a V-8 model. Whichever model he chooses, he plans to drive it for a period of S years and then sell it. Assume that the trade-in value of the two vehicles at the end of the S-year ownership period will be identical. and limmy needs to make a financial