acc_433b____solutions_to_hw_3 - ACC 433B Solutions to HW 3...

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ACC 433B Solutions to HW 3 20-16 Economic order quantity for retailer. 1. D = 10,000, P = $200, C = $7 7 200 $ 000 , 10 2 C DP 2 EOQ × × = = = 755.93 2245 756 jerseys 2. Number of orders per year = EOQ D = 756 000 , 10 = 13.22 2245 14 orders 3. day working each Demand = days working of Number D = 365 000 , 10 = 27.40 jerseys per day Purchase lead time = 7 days Reorder point = 27.40 × 7 = 191.80 2245 192 jerseys 20-22 JIT production, relevant benefits, relevant costs. 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 1
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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
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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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acc_433b____solutions_to_hw_3 - ACC 433B Solutions to HW 3...

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