Bradcompanyhascorrectlycomputeditseconomicorderquantit

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23.Brad Company has correctly computed its economic order quantity as 500 units. However, management would rather order in quantities of 600 units.  How will Brad's total annual purchase order cost and total annual carrying cost for an order quantity of 600 units compare to the respective amounts for an order quantity of 500 units?A.higher purchase order cost and lower carrying costB.lower purchase order cost and higher carrying costC.higher purchase order cost and higher carrying costD.lower purchase order cost and lower carrying costE.none of the aboveA24.Carter Company buys a certain part for its manufacturing process for $20 a part and needs 10,000 partsa year.  It costs $3 a year to carry one of these parts in inventory.  The cost of placing a purchase order for these parts is $15.  Assuming that the parts will be required evenly throughout the year, the formulafor the economic order quantity is the square root of:A25.For its economic order quantity model, a company has a $10 cost of placing an order and a $2 annual cost of carrying one unit in stock.  If the cost of placing an order increases by 20%, the annual cost of carrying one unit in stock increases by 25%, and all other considerations remain constant, the economic order quantity will:A.decreaseB.increaseC.remain unchangedD.either increase or decrease, depending on the reorder pointE.either increase or decrease, depending on the safety stockC26.For inventory management, ignoring safety stocks, a valid computation of the reorder point is:A.order costs plus carrying costsB.the square root of the anticipated demand during lead timeC.the anticipated demand per day during lead time times lead time in daysD.the economic order quantityE.the economic order quantity times the anticipated demand during lead time
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C27.The Cappalari Company wishes to determine the amount of safety stock that it should maintain for Product D to result in the lowest cost.  The following information is available:Stockout cost................................................................................................$ 80 per occurrenceCarrying cost of safety stock.......................................................................$2 per unitNumber of purchase orders..........................................................................5 per yearThe options available to Cappalari are as follows:Units ofProbability of RunningSafety Stockout of Safety Stock1050%3030%5010%555%The number of units of safety stock that will result in the lowest cost is:A.30B.50C.55D.10E.none of the aboveSUPPORTING CALCULATION:SafetyExpectedStockoutCarryingStockout andStockStockouts   Cost      Cost   Carrying Cost102.5$200$  20$220301.51206018050.54010014055.2520110130B

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