Question

In: Operations Management

Demand for a product is 3200 TL units per quarter. Each orderhas a fixed cost...

Demand for a product is 3200 TL units per quarter. Each order has a fixed cost of 2500 TL. Annual holding cost per product is 80 TL.

Calculate: a) number of products that the company should order

b) average inventory

c) number of orders per year

d) expected time between orders

e) total relevant cost

Expert Solution

Quarterly Demand = 3200

Annual Demand = D = 3200 * 4 = 12800 units

Order cost = S = 2500

Annual Holding cost = H = 80

a) Number of products that the company should order = EOQ = = = 894.43 units

b) Average inventory = EOQ / 2 = 894.43 / 2 = 447.21 units

c) Number of orders per year = D / EOQ = 12800 / 894.43 = 14.31 orders

d) Expected time between orders = 12 months / No. of orders per year = 12 / 14.31 = 0.84 months

e) Total relevant cost = Ordering Cost + Annual Holding cost = No. of orders * S + Average Inventory * H = 14.31 * 2500 + 447.21 * 80 = 35,775‬ + 35,776.8‬ = $71,551.8

keosha answered 2 years ago

1. A) If a company makes 100 units of product, the allocated fixed cost per unit...

1. A) If a company makes 100 units of product, the allocated fixed cost per unit is $5 and the variable cost per unit is $6. What will be the per-unit total cost (fixed plus variable cost) if the company makes 200 units? B) At a production and sales level of 1,000 units, the company’s costs are as follows: Variable manufacturing costs per unit $20 Allocated fixed manufacturing cost per unit $10 Variable selling costs per unit $ 5 Allocated...

2) A corporation sells 66,000 units of a product for $19.75 each; the variable cost per...

2) A corporation sells 66,000 units of a product for $19.75 each; the variable cost per unit is $11.50 each. The fixed costs are $315,000. Required A) breakeven units and dollars. B) how many units must be sold to achieve targeted income of $465,0007 C) What is the margin of safety in dollars and percentage? D) What is the operating leverage? E) The sales manager wants to raise prices by $2.00 each; demand will drop by ten percent, and the...

A manufacturing process has a fixed cost of $300,000 per month. Each unit of product being...

A manufacturing process has a fixed cost of $300,000 per month. Each unit of product being produced contains $160 worth of material and $220 in labor. Each finished product will sell for $450. How many units must be sold each month to break even? What level of monthly revenue is necessary to break even? What is the expected profit for sales levels of 1,000, 2,500, and 5,000 units respectively.

Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as...

Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks. Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what will...

FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit...

FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks. Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what...

Assume you have a product with the following parameters: Annual Demand = 360 units Holding cost per year = $1.00 per unit Order cost = $100 per order

Assume you have a product with the following parameters: Annual Demand = 360 units Holding cost per year = $1.00 per unit Order cost = $100 per order a) What is the EOQ for this product?b) In addition, assume a 300-day work year, how many orders should be processed per year? c) What is the expected time between orders?

The annual demand for a product is 1,000 units. The company orders 200 units each time...

The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead-time is 6 days, and the company has determined that 20 units should be held as a safety stock. There are 250 working days per year. What is the reorder point?

(7) The annual demand for a product is 500,000 units. The inventory carrying cost for this...

(7) The annual demand for a product is 500,000 units. The inventory carrying cost for this product is 25% per unit per year and the cost of placing one order is $200. The supplier of this product gives quantity discounts outlined in the table below. Level 1 Level 2 Level 3 Level 4 If Quantity is: 1 to 1999 2000 to 9999 10000 to 49999 50000 or higher Price $ 20.00 $ 19.80 $ 19.75 $ 19.70 Provide the following...

A product has a daily demand of 26 units per day. Ordering costs are $60 per...

A product has a daily demand of 26 units per day. Ordering costs are $60 per order. The annual carrying costs are measured at 20% of item value. Your supplier has offered you three item cost/price and quantity scenarios (1) you pay $150 per unit if your order quantity is 199 units or less, (2) you pay $121 per unit if your order quantity is between 200 and 4999 units, and (3) you pay $114 per unit if your order...

4. The firm planned to sell 40,000 units at a price of 14 TL per unit...

4. The firm planned to sell 40,000 units at a price of 14 TL per unit in the master budget. The firm actually sold 38,000 units. The firm planned to produce 42,000 units in the master budget but the firm actually produced 40,000 units. In master budget, each unit requires 0.6 direct labor hours and direct labor cost per hour is 7 TL. (14 Points) Actual Results Flexible Budget Master Budget Sales Revenue 570,000 Total Direct Materials Cost 151,620 171,000...