Question :
Answer the following questions using the information below:
Short Grass Incorporated : 1211973
Answer the following questions using the information below:
Short Grass Incorporated is a distributor of golf balls. Martin’s Golf Supplies is a local retail outlet which sells golf balls. Martin’s purchases the golf balls from Short Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Short Grass Incorporated pays all incoming freight, and Martin’s Golf Supplies does not inspect the balls due to Short Grass’ reputation for high quality. Annual demand is 155,520 golf balls at a rate of 2,991 balls per week. Martin’s Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
Relevant ordering costs per purchase order$125.00
Carrying costs per carton per year:
Relevant insurance, materials handling,
breakage, etc., per year$ 0.77
11) If Martin’s makes an order (1/12 of annual demand) once per month, what are the relevant total costs?
A) $1,500.00
B) $652.50
C) $2,152.50
D) $3,000.00
12) What is the economic order quantity?
A) 180 cartons
B) 273 cartons
C) 270 cartons
D) 360 cartons
13) Purchasing at the EOQ recommended level, how many deliveries will be made during each time period?
A) 2 deliveries
B) 6.0 deliveries
C) 7.91 deliveries
D) 12 deliveries
14) Purchasing at the EOQ recommended level, what are the relevant total costs?
A) $1,500.00
B) $1,978.60
C) $989.37
D) $3,000.00
15) The purchase-order lead time is the ________.
A) time between placing an order and its delivery
B) time between receiving a customer order and producing the products
C) time between receiving a customer order and delivering the items
D) time required to correct errors in the defective products
16) Which of the following statements is true of the economic-order-quantity decision model?
A) It assumes purchasing costs are relevant because the cost per unit changes due to the quantity ordered.
B) It assumes that quality costs are considered only to the extent that these costs affect ordering or carrying costs.
C) It assumes that stockout costs are relevant even if no stockouts occur.
D) It assumes that ordering costs and carrying costs are irrelevant.
Answer the following questions using the information below:
Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,400 lenses per year, 200 per week, at $35 per lens. Blitz covers all shipping costs. Vision earns 25% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 225 lenses per week. The following data are available:
Relevant ordering costs per purchase order$41.25
Relevant insurance, materials handling, breakage,
and so on, per year$ 4.50
17) What is the economic order quantity for Vision?
A) 457 lenses
B) 328 lenses
C) 266 lenses
D) 161 lenses
18) What is the reorder point?
A) 500 lenses
B) 562.5 lenses
C) 1050 lenses
D) 1062.5 lenses
19) Beryl Company sells 500 flash drives per week. Purchase-order lead time is 1 1/2 weeks and the economic-order quantity is 1,125 units. What is the reorder point?
A) 1,687.5 units
B) 937.5 units
C) 750 units
D) 1,125 units
20) Delinz Company can predict with virtual certainty the demand for its products. Delinz’s sells 75 hams per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 150 hams. What is the reorder point?
A) 675 hams
B) 225 hams
C) 450 hams
D) 150 hams
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