The HomeServe Corporation provides a wide range of household essentials to householders. One of the products it
Question:
The HomeServe Corporation provides a wide range of household essentials to householders. One of the products it offers is dotted paper rolls, used in kitchens and toilets. The supplier for the dotted paper rolls pays all incoming freight. No incoming inspection of the paper roll is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the HomeServe Corporation has collected the following information: Annual demand for dotted paper rolls 24,200 rolls Ordering cost per purchase order $175 Carrying cost per year 15% of purchase costs Safety-stock requirements None Cost of dotted paper rolls $10 per roll The purchasing lead time is 4 weeks. The HomeServe Corporation is open 260 days a year (52 weeks for 5 days a week).
1. Calculate the EOQ for dotted paper roll.
2. Calculate the number of orders that will be placed each year.
3. Calculate the reorder point for dotted paper roll.
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ