Week 3 Master

Week 3 Master - Week3Master 2016 (20min.)...

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Week 3 Master 20-16 (20 min.)   Economic order quantity for retailer. 1. D = 10,000 jerseys per year, P = $200, C = $7 per jersey per year  = 755.93  2245  756 jerseys 2.   Number of orders per year =  =  = 13.22  2245  14 orders 3.           =   =   =  27.40 jerseys per day Purchase lead time =  7 days      Reorder point =  27.40  ×  7 =  191.80   2245  192 jerseys 20-22 (20 min.) JIT production, relevant benefits, relevant costs.
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1. Solution Exhibit 20-22 presents the annual net benefit of $315,000 to  Champion Hardware Company of implementing a JIT production system.   2. Other   nonfinancial   and   qualitative   factors   that   Champion   should  consider in deciding whether it should implement a JIT system include: a. The possibility of developing and implementing a detailed system  for   integrating   the   sequential   operations   of   the   manufacturing  process.   Direct   materials   must   arrive   when   needed   for   each  subassembly so that the production process functions smoothly. b. The ability to design products that use standardized parts and  reduce manufacturing time. c. The ease of obtaining reliable vendors who can deliver quality  direct materials on time with minimum lead time. d. Willingness   of   suppliers   to   deliver   smaller   and   more   frequent  orders. e. The confidence of being able to deliver quality products on time.  Failure to do so would result in customer dissatisfaction. f. The skill levels of workers to perform multiple tasks such as minor  repairs, maintenance, quality testing and inspection. SOLUTION EXHIBIT 20-22 Annual Relevant Costs of Current Production System and JIT Production  System for Champion Hardware Company
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Relevant Items Relevant  Costs  under  Current  Production  System Relevant Costs  under JIT Production  System Annual tooling costs $100,000 Required return on investment: 15% per year  ×  $1,000,000 of average inventory  per year $150,000 15% per year  ×  $200,000 a  of average inventory 
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This note was uploaded on 06/01/2011 for the course ACCT 433b taught by Professor Alfredcontreras during the Spring '11 term at National.

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Week 3 Master - Week3Master 2016 (20min.)...

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