Question : 41) The reorder point the quantity level of inventory at : 1211976

 

41) The reorder point is the quantity level of inventory at which a new purchase order is made.

 

42) Due to unprecedented growth during the year, Flowers by Kelly decided to use some of its surplus cash to increase the size of several inventory order quantities that had been previously determined using an EOQ model.

 

Required:

Identify whether increasing the size of inventory orders will increase, decrease, or have no effect on each of the following items.

 

________a.Average inventory

 

________b.Cost of goods sold

 

________c.Number of orders per year

 

________d.Total annual carrying costs

 

________e.Total annual carrying and ordering costs

 

________f.Total annual ordering costs

43) The only product of a company has an annual demand of 14,000 units. The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20.

 

Required:

Determine the economic order quantity.

 

44) Picture Company has one particular product that has an annual demand of 5,000 units. Total manufacturing costs per unit total $50. Ordering costs for the product total $60 per purchase order. Currently, the carrying costs per unit are 25% of manufacturing costs.

 

Required:

Determine the economic manufacturing order quantity.

 

45) Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data. For direct material XXX he was able to recover the following:

 

Average inventory level of XXX

200

Orders per year

40

Average daily demand

48

Working days per year

250

Annual ordering costs

$4,000

Annual carrying costs

$6,000

 

Ralph purchases at the EOQ quantity level.

 

Required:

Determine the annual demand, the cost of placing an order, the annual carrying cost of one unit, and the economic order quantity.

46) Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units. The cost of placing an order is $80 and the cost of carrying one unit in inventory for one year is $25.

 

Required:

a.Use the economic-order-quantity model to determine the optimal order size.

 

b.Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.

 

c.Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.

 

47) An inventory item of Avizone Corp. has an average daily demand of 25 units with a maximum daily demand of 30 units. The economic order quantity is 500 units. Without safety stocks, the reorder point is 125 units. Safety stocks are set at 235 units.

 

Required:

a.Determine the reorder point with safety stocks.

b.Determine the maximum inventory level.

c.Determine the average lead time.

48) For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:

 

Annual demand in units

250

Days used per year

250

Lead time, in days

10

Ordering costs

$100

Annual unit carrying costs

$20

 

Required:

Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.