Problem 11-19 (Algo) The annual demand for a product is 15,000 units. The weekly demand is 288 units with a standard deviation of 80 units. The cost to place an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.10 per unit. a. Find the reorder point necessary to provide a 90 percent service probability. Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places. Reorder point units b. Suppose the production manager is asked to reduce the safety stock of this item by 45 percent. If she does so, what will the new service probability be? Note: Use Excel's NORM.S.DIST() function to find the correct probability for your computed z value. Round "z" value to 2 decimal places and final answer to 1 decimal place. Service probability %

Problem 11-19 (Algo) The annual demand for a product is 15,000 units. The weekly demand is 288 units with a standard deviation of 80 units. The cost to place an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.10 per unit. a. Find the reorder point necessary to provide a 90 percent service probability. Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places. Reorder point units b. Suppose the production manager is asked to reduce the safety stock of this item by 45 percent. If she does so, what will the new service probability be? Note: Use Excel's NORM.S.DIST() function to find the correct probability for your computed z value. Round "z" value to 2 decimal places and final answer to 1 decimal place. Service probability %

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...

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Trumbull Co. plans to produce 100,000 toy cars during September. Planned production for October is 125,000 cars. Sales are forecasted at 90,000 toy cars for September and 120,000 toy cars for October. Each toy car requires four wheels. Trumbulls policy is to maintain 10 percent of the next months production in inventory at the end of a month. How many wheels should Tram bull purchase during September? a. 195,000 b. 112,500 c. 102,500 d. 410,000
Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of 12.50 each. Beginning inventory of finished goods is 42,500, and ending inventory of finished goods is expected to be 34,000. Total selling expense is projected at 26,000, and total administrative expense is projected at 134,000. Required: 1. Prepare an income statement in good form. Be sure to include the percent of sales column. 2. What if the cost of goods sold percentage for the past few years was 65 percent? Explain how management might react.
Refer to Cornerstone Exercise 8.1, through Requirement 1. FlashKick requires ending inventory of product to equal 20 percent of the next months unit sales. Beginning inventory in January was 3,100 practice soccer balls and 400 match soccer balls. Required: 1. Construct a production budget for each of the two product lines for FlashKick Company for the first three months of the coming year. 2. What if FlashKick wanted a production budget for the two product lines for the month of April? What additional information would you need to prepare this budget? FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKicks best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following: Required: 1. Construct a sales budget for FlashKick for the first three months of the coming year. Show total sales for each product line by month and in total for the first quarter. 2. What if FlashKick added a third linetournament quality soccer balls that were expected to take 40 percent of the units sold of the match balls and would have a selling price of 45 each in January and February, and 48 each in March? Prepare a sales budget for Flash- Kick for the first three months of the coming year. Show total sales for each product line by month and in total for the first quarter.
Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
A company produces two products. E and F in batches of 100 units. The production and cost data are: The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year? A. $216,000 B. $204,000 C. $12,000 D. $54,000