Purchase Solution

EQQ, average inventory, order per year, and average daily demand

Not what you're looking for?

Ask Custom Question

Please help with this accounting assignment:

For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:

Annual demand in units 250
Days used per year 250
Lead time, in days 13
Ordering costs $100
Annual unit carrying costs $20

Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.

Purchase this Solution
Solution Summary

This solution provides a detailed, step by step computation of the given accounting problem.

Solution Preview

For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

View More Free Quizzes
Related BrainMass Solutions

  • carrying cost and restocking cost

    cost, the restocking cost, and the EQQ.

  • Operations Management Inventory Calculations

    Let's calculate the Annual Demand Annual Demand = Daily Demand X Number Operation Days Per Year D = 2 X 250 = 500 units Let's calculate the Annual Order Costs Annual Order Costs = Cost per order X Average Number of Orders Per Year = Co(D/Q) = 25

  • EOQ Model

    D =Total demand= 300 units per year S = ordering cost=$125 per order H = carrying cost=$25 per unit per year EOQ=(2DS/H)^0.5=(2*300*125/25)^0.5=54.7723 or 55 units average inventory? annual carrying cost?

  • Inventory Management: Safety Stock, Re-Order, EOQ

    507680 Inventory Management: Calculating Safety Stock, Re-Order point, EOQ, Average Inventory, and Total Inventory Cost The average demand faced by a retailer in the past is 200 units/day with a standard deviation of daily demand of 15 units/day.

  • Calculating the inventory costs and optimal reorder point

    Purchase Cost=Annual Demand*Purchase Cost=4475*125=$559,375 Ordering cost=Number of orders*ordering cost=17.90*110=1969.00 Holding Cost=Average inventory*Average holding cost per unit per year=125*1.85=$231.25 Total annual cost=Purchase Cost+ Ordering

  • Calculating EOQ and inventory costs

    Reorder Point=lead time*average daily demand=4*15=60 units 6. How many orders per year will be necessary based upon using the EOQ?

  • Calculating various inventory paremeters

    Demand for Classic Cookies is 5000 boxes per year (365 days) and the daily demand can be assumed to be a constant. The cost of ordering a batch of boxes of cookies is $80 per order including the cost of shipment.

  • Clothes, Inc., has an average annual demand

    ., has an average annual demand Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units. The cost of placing an order is $80 and the cost of carrying one unit in inventory for one year is $25.

  • Calculating the EOQ and inventory costs

    These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75.

View More Related Solutions