Ch. 12 Inventory Management (1) - Chapter 12 Inventory...

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Chapter 12 - Inventory Management CH. 12: INVENTORY MANAGEMENT Problem 1 a. Item Usage Unit Cost Usage x Unit Cost Category 4021 90 $1,400 $126,000 A 9402 300 12 3,600 C 4066 30 700 21,000 B 6500 150 20 3,000 C 9280 10 1,020 10,200 C 4050 80 140 1,120 C 6850 2,000 10 20,000 B 3010 400 20 8,000 C 4400 5,000 5 25,000 B b. In descending order: Ca teg or y Percent of Items Percent of Total Cost A 11.1% 57.8% B 33.3% 30.2% C 55.6% 11.9% 12-1 Item Usage x Cost Category 4021 $126,000 A 4400 25,000 B 4066 21,000 B 6850 20,000 B 9280 10,200 C 3010 8,000 C 9402 3,600 C 6500 3,000 C 4050 1,120 C 217,920
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Chapter 12 - Inventory Management D52 15 110 1,650 C D57 40 120 4,800 B Problem 3 D = 4,860 bags/yr. S = $10 H = $75 a. bags 36 75 10 ) 860 , 4 ( 2 H DS 2 Q = = = b . Q/2 = 36/2 = 18 bags c. orders 135 orders / bags 36 bags 860 , 4 Q D = = d. S Q D H 2 / Q TC + = 700 , 2 $ 350 , 1 350 , 1 ) 10 ( 36 860 , 4 ) 75 ( 2 36 = + = + = e. Using S = $5, Q = 757 . 37 75 ) 11 )( 860 , 4 ( 2 = 79 . 831 , 2 $ 90 . 415 , 1 89 . 415 , 1 ) 11 ( 757 . 37 860 , 4 ) 75 ( 2 757 . 37 TC = + = + = Increase by [$2,831.79 – $2,700] = $131.79 Problem 4 D = 40/day x 260 days/yr. = 10,400 packages S = $60 H = $30 a. oxes b 204 96 . 203 30 60 ) 400 , 10 ( 2 H DS 2 Q 0 = = = = b. S Q D H 2 Q TC + = 82 . 118 , 6 $ 82 . 058 , 3 060 , 3 ) 60 ( 204 400 , 10 ) 30 ( 2 204 = + = + = c. Yes d. ) 60 ( 200 400 , 10 ) 30 ( 2 200 TC 200 + = TC 200 = 3,000 + 3,120 = $6,120 12-2
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Chapter 12 - Inventory Management 6,120 – 6,118.82 (only $1.18 higher than with EOQ, so 200 is acceptable.) Problem 5 D = 750 pots/mo. x 12 mo./yr. = 9,000 pots/yr. Price = $2/pot S = $20 P = $50 H = ($2)(.30) = $.60/unit/year a. 775 60 . 774 60 . 20 ) 000 , 9 ( 2 H DS 2 Q 0 = = = ) 20 ( 6 . 774 000 , 9 ) 60 (. 2 6 . 774 TC + = TC = 232.35 + 232.36 = 464.71 If Q = 1500 ) 20 ( 500 , 1 000 , 9 ) 6 (. 2 500 , 1 TC + = TC = 450 + 120 = $570 Therefore the additional cost of staying with the order size of 1,500 is: $570 – $464.71 = $105.29 b. Only about one half of the storage space would be needed. Problem 6
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This note was uploaded on 10/19/2010 for the course ACCOUNTING Finance 23 taught by Professor Bob during the Winter '10 term at Wayne State University.

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Ch. 12 Inventory Management (1) - Chapter 12 Inventory...

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