fm28 3 - c Transfers per year = $4,500,000/$45,000 = 100 or...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
SOLUTIONS TO END-OF-CHAPTER PROBLEMS 28-1 a. EOQ = ) P )( C ( ) S )( F ( 2 = ) 5 . 1 )( 2 . 0 ( ) 000 , 90 )( 15 ($ 2 = 000 , 000 , 9 = 3,000 bags per order. b. The maximum inventory, which is on hand immediately after a new order is received, is 4,000 bags (3,000 + 1,000 safety stock). At $1.50 per bag the dollar cost is $6,000. c. = inventory Average 2 000 , 3 + 1,000 = 1,500 + 1,000 = 2,500 bags or $3,750. d. 000 , 3 000 , 90 = 30 orders per year. 30 days 365 = 12.1 12 days. The company must place an order every 12 days. 28-2 a. C* = r ) T )( F ( 2 = . F = $27; T = $4,500,000; r = 12%. size n transactio Optimal C* = 12 . 0 ) 000 , 500 , 4 )($ 27 ($ 2 = $45,000. b. Average cash balance = $45,000/2 = $22,500.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: c. Transfers per year = $4,500,000/$45,000 = 100, or one approximately every 3.6 ≈ 4 days. d. Total cost = 2 * C (r) + * C T (F) = 2 000 , 45 $ (0.12) + 000 , 45 $ 000 , 500 , 4 $ ($27) = $2,700 + $2,700 = $5,400. If it maintained an average balance of $50,000, this would mean transfers of $100,000. There would be $4,500,000/$100,000 = 45 transfers per year. The cost would be 0.12($50,000) + 45($27) = $7,215. If it maintained a zero balance, it would have to make 360 transfers per year, so its cost would be 360($27) = $9,720. Answers and Solutions: 28 - 3...
View Full Document

Ask a homework question - tutors are online