Question

In: Finance

Alexis Company uses 979979 units of a product per year on a continuous basis. The product...

Alexis Company uses

979979

units of a product per year on a continuous basis. The product has a fixed cost of

$4242

per order, and its carrying cost is

$44

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. Calculate the EOQ.

b. Determine the average level of inventory.

(Note:

Use a 365-day year to calculate 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.

a. Alexis' EOQ is

nothing

units. (Round to the nearest whole number.)

Expert Solution

Following assumptions have been taken to solve this sum:

Average Delivery Time= 5 days

For Average consumption, 979979 units has been divided by 365 days.

jeff jeffy answered 5 months ago

Alexis Company uses 800 units of a product per year on a continuous basis. The product...

Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 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. Calculate the EOQ. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.)...

2). WZY processing company uses 2,400 units of a product per year on a continuous basis....

2). WZY processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are RM60 per year and ordering costs are RM252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. (a) Calculate the economic order quantity. (b) Calculate the total cost per year to order and carry this item. (c) If WZY...

Taizhou Products uses 800 units of a product per year n a continuous basis. The product...

Taizhou Products uses 800 units of a product per year n a continuous basis. The product has carrying costs of $50 per unit per year and order costs of 300$ per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety dock of 5 days usage in inventory. Further, the operation director would need to increase the firm liquidity in short run. a)Determine the reorder point. (Assume a 360-day year)...

A company uses 12,000 units per year, orders in quantities of 1,000 units and keeps a...

A company uses 12,000 units per year, orders in quantities of 1,000 units and keeps a 200 units safety stock. What is their average inventory turnover? 17.14 24 12 10

ABC Company makes 40,000 units per year of a part it uses in the products it...

ABC Company makes 40,000 units per year of a part it uses in the products it manufactures. The per unit product cost of this part is shown below: direct materials .............. $15.30 direct labor .................. 24.70 variable overhead ............. 2.10 fixed overhead ................ 27.40 total ......................... $69.50 An outside supplier has offered to sell ABC Company 40,000 units of this part a year for $66.10 per unit. If ABC Company accepts this offer, the facilities now being used to make...

Aholt Company makes 40,000 units per year of a part it uses in the products it...

Aholt Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $11.30 Direct labour 22.70 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 24.70 Unit product cost $59.90 An outside supplier has offered to sell the company all of these parts it needs for $46.20 a unit. If the company accepts this offer, the facilities now being used to make the part...

Foulds Company makes 13,000 units per year of a part it uses in the products it...

Foulds Company makes 13,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 12.70 Direct labor 20.30 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 10.40 Unit product cost $ 45.90 An outside supplier has offered to sell the company all of these parts it needs for $41.80 a unit. If the company accepts this offer, the facilities...

Foto Company makes 50,000 units per year of a part it uses in the products it...

Foto Company makes 50,000 units per year of a part it uses in the products it manufactures. The cost per unit of this part is shown below: direct materials .............. $13.00 direct labor .................. 10.10 variable overhead ............. 6.50 allocated fixed overhead ...... 8.60 total ......................... $38.20 An outside supplier has offered to sell Foto Company 50,000 of these parts for $31.60 per unit. If the company accepts this offer, the facilities now being used to make the part could...

Foto Company makes 10,000 units per year of a part it uses in the products it...

Foto Company makes 10,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 13.00 Direct labor 20.60 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 10.70 Unit product cost $ 47.10 An outside supplier has offered to sell the company all of these parts it needs for $42.10 a unit. If the company accepts this offer, the facilities now being used to make...

Foto Company makes 12,000 units per year of a part it uses in the products it...

Foto Company makes 12,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 12.80 Direct labor 20.40 Variable manufacturing overhead 2.60 Fixed manufacturing overhead 10.50 Unit product cost $ 46.30 An outside supplier has offered to sell the company all of these parts it needs for $41.90 a unit. If the company accepts this offer, the facilities now being used to make...