ZuoTi.Pro
Question

QUESTION ONE It was a typical morning in Melbourne with thousands of tourists headed to the beaches to have fun and boat cruising on the peaceful ocean. About a few kilometres away lies Frankston town where the CEO of Fast electronics supply (FES) limited faced a severe problem with Fast Supply Limiteds inventory management. The CEO worked in electronic components distribution industry for more than 20 years Six years ago, he founded the Fast Electronics Supply(FES) ltd an electronic distributor. Despite a couple of successful years, the company is now troubled with eroding profit margins. To reverse the situation, the CEO talked to a prestigious local university where he was advised that the most effective way to increase profitability is to cut inventory costs and introduce an effective purchasing process. Currently suppliers take between two and four weeks to deliver. It costs FES K20 to place an order with suppliers. The company unity of stock is K10.When Fast Supply ltd does not have enough inventory to fill a customers order, the sales are lost and this costs the company K2 per unit. To avoid this minimum stock (buffer stock) is kept. Furthermore,reorder level is placed at 75% of the maximum stock level. This was done to try to reduce holding costs which stands at 2% of the stock value-There are 50 weeks in a year The following information about the demand of the stock is given to you orders a big amount of stock every time it felt it is neces sary. The cost of one WEEK | DEMAND | WEEK | DEMAND | WEEK | DEMAND | WEEK | DEMAND | WEEK | DEMAND 1022 21 869 902 1109 13 947 968 917 1069 17 959 1146 32 703 1016 33 823 1166 34 862 35 966 663 31 1009 2 3 4 5 6 7 12 959 756 882 829 726 666 23 24 25 829 26 27 42 852 43 44 736 45 942 1036 15 723 766 16 36 1002 46 1029 37 763 47 1039

1086 18 19 20 992 28 29962 30 996 8 9 10 929 879 1086 38 39 1122 40 989 48 49 50 793 932 856 1066 1052 979 REQUIRED (A) Calculate the Reorder level (B) Calculate the minimum Stock level (2 Marks) (C) Calculate the reorder Quantity (D) Calculate total stocking costs for the current system (5 Marks) (E) Using a table,with orders of between 10 and twenty per year, Calculate the (2 Marks) (2 Marks) Economic Order Quantity (EOQ) and confirm your answer using a formular (10 marks) (F) Calculate total stocking costs if EOQ is used (4 Marks) (Total 25 Marks)

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Re-order period- Order cost- Price= Lost cost- Re-order level- Holding cost- Time gap between placing order and receiving order 2 weeks - 4 weeks K20 K10 K2 per unit 75% of maximum stock level 2% of st value (maximum usage+minimum usage)/2 Maximum Usage per week- Minimum usage per week- Maximum lead time- Minimum lead time- 1166 so, Average usage per weeks= 663 914.5 = approx 915 units 4 weeks so, Average lead time per weeks-(maximum leadtime+leadtime)/2 2 weeks 3 weeks Re-order level Maximum re-order period Re-order level 4week x 1166 units x Maximum Usage Minimum level of inventory - Re-order level (Average rate of consumption x average time of inventory delivery) 4664 units (or) = Minimum level + Minimum level = 4664u nits-(915 units x 3 weeks) (Average rate of consumption x Average time to obtain fresh supplies) = 4664 units-2745 units 1919 unitsCurrent stocking cost 2AO Re-order Quantity Total annual demand re-order quantity no. order EOQ 46370 units 3045 units annual demand/re-order quantity where, Order cost- K20 Price K10 AAnnual usage olding cost- OOrdering cost per CAnnual carrying 2% of stock value Ξ KO.2 46370 units 15.23 units Total annual demand 15 orders apprx Holding cost Total Cost- K0.2 order Total ordering cost Total Carrying cost Annual demandx ordering cost1/2 ordering quantity x carrying cost per unit Re-order quantitny per order EOO 3045.32 Units 3045 approx cost of one unit, ie, carrying cost percentage x cost of one unit 46370 x K20+(1/2x 3045 x KO .2) 3045 K304.56 K304.5 K609.06

3 0
Add a comment
Know the answer?
Add Answer to:
QUESTION ONE It was a typical morning in Melbourne with thousands of tourists headed to the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • can you show how to do this work Question 13 Using a computerized Inventory Management System,...

    can you show how to do this work Question 13 Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores X and their distribution warehouse. The Paint Supply Store franchise sells an average of 74 gallons of Purple Paint every week (for 52 weeks per year, Standard Deviation of the Demand - 8 gallons). They purchase Purple Paint from their supplier at a price...

  • High Tech Inc. is a virtual store that stocks a variety of calculators in its warehouse. Customer orders are placed; the orders are picked and packaged; and then orders are shipped to the customers. A...

    High Tech Inc. is a virtual store that stocks a variety of calculators in its warehouse. Customer orders are placed; the orders are picked and packaged; and then orders are shipped to the customers. A fixed-order-quantity inventory control system (FQS) helps monitor and control these SKUs. The following information is for one of the calculators that High Tech stocks, sells, and ships. Average demand 9.5 calculators per week Lead time 5 weeks Order cost $15/order Unit cost $10.00 Carrying charge...

  • Data Table Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying...

    Data Table Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying cost per year 10% of purchase costs Safety-stock requirements None Cost of denim cloth $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used...

  • Petty House operates 52 weeks per year, 6 days per week, and uses a continuous review inventory

    Petty House operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system (i.e. Q system). It purchases kitty litter for $ 10 per bag. The following information is available about these bags. Demand = 102 bags/ week Order cost = $ 49/ order Annual holding cost = 25 percent of cogs Desired cycle service level = 80 percent Lead time = 3 weeks Standard deviation of weekly demand = 15 bags Current on-hand inventory...

  • Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of...

    Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 64 gallons of Green Paint every week (for 52 weeks per year). They purchase Green Paint from their supplier at a price of $3.50 per gallon. [The company does not hold Safety Stock] It takes 2.25 weeks to receive an order...

  • (2) Cress Electronic Products manufactures components used in the automotive industry. Cress purchases parts for use...

    (2) Cress Electronic Products manufactures components used in the automotive industry. Cress purchases parts for use in its manufacturing operation from a variety of different suppliers. One particular supplier provides a part where the assumptions of the EOQ model are realistic. The annual demand is 7500 units, the ordering cost is $40 per order, and the annual holding cost rate is 35%. a. Assume 350 days of operation per year. Cress Electronics wants a 97.5% service level. If the lead...

  • Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous...

    Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases kitty litter for $10.75 per bag. The following information is available about these bags. Demand = 95 bags/week Order cost = $58/order Annual holding cost = 25 percent of cost Desired cycle@service level = 90 percent Lead time = 4 weeks (28 working days) Standard deviation of weekly demand = 16 bags Current on-hand inventory is 315 bags, with...

  • Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous...

    Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.25 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. Demand 96 bags/week Order cost- $58/order >Annual holding cost 26 percent of cost > Desired cycle-service level 90 percent > Lead time 1 week(s) (7 working days) > Standard deviation of weekly demand 13 bags >Current on-hand...

  • ​Sam's Cat Hotel operates 52 weeks per​ year and uses a continuous review inventory system. It...

    ​Sam's Cat Hotel operates 52 weeks per​ year and uses a continuous review inventory system. It purchases kitty litter for ​$10.75 per bag. The following information is available about these bags. Demand = 85 bags/week Order cost = $57/order Annual holding cost = 26% of cost per bag Desired cycle-service level = 90% Lead-time = 2 weeks Standard deviation of weekly demand = 18 bags What is the economic order quantity (EOQ) for kitty litter? What would be the average...

  • Umoja Club uses 10,000 cases of special sorghum beer monthly. One case costs Sh. 5,000. Holding...

    Umoja Club uses 10,000 cases of special sorghum beer monthly. One case costs Sh. 5,000. Holding cost is 30% of the cost of a case p.a. while ordering cost is sh. 100.000 per order placed. The firm works 360 days in a year while lead-time is 6 days. Required: a) The EOQ (7 Marks) b) Days between orders (4 Marks) c) The reorder level (4 Marks) d) The total cost of the optimal inventory policy (7 Marks) e) State any...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT