Management: Problem Sets

Topics: Inventory, Following Pages: 1 (405 words) Published: October 23, 2014

9.2) A company is using a carrier to deliver goods to a major customer. The annual demand is $2,500,000, and the average transit time is 10 days. Another carrier promises to deliver in 7 days. What is the reduction in transit inventory? I = tA=(10 – 7 ) 2,500,000=$7,500,000=$20,547.90

365365 365
9.4) A florist carries an average inventory of $12,000 in cut flowers. The flowers require special storage and are highly perishable. The florist’s estimates capital costs at 10%, storage costs at 25%, and risk costs 50%. What is the annual carrying cost? 10%+25%+50%=85%X$12,000 =$10,200

9.6) An importer operates a small warehouse that has the following annual costs. Wages for purchasing are $45,000, purchasing expenses are $30,000, customs and brokerage costs are $25 per order, the cost of financing the inventory is 8%, storage costs are 6%, and the risk costs are 10%. The average inventory is $300,000, and 6000 orders are placed in a year. What are the annual ordering and carrying costs? Annual ordering cost  =  $75,000+($25 * 6000) = $225,000

Annual carrying cost:
.08+. 06+. 10  = 24%
Annual carrying cost = 300,000 *  .24  =  $72,000
9.8) Given the following data, calculate a level production plan, quarterly ending inventory, and average quarterly inventory. If inventory-carrying costs are $6 per unit per quarter, what is the annual carrying cost? Opening and ending inventory are zero. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Totals

Forecast Demand 5000 7000 8500 9500 30,000
Production 7500 7500 7500 7500 30,000
Ending Inventory 2500 3000 2000 0 Average Inventory 1250 2750 2500 1000 Inventory Cost 7500 16500 15000 6000 45000 9.14) If the annual cost of goods sold is $12,000,000 and the average inventory is $2,250,000: What is the inventory turns ratio?

$12,000,000 = 5.33
$2,250,000
What would be the reduction in average inventory if, through better materials management, inventory turns were increased to 10 times per year?...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on PROBLEM SET
  • Problem Set Essay
  • Problem Set Essay
  • Problem Set Essay
  • Problem Set Essay
  • Problem Set Essay
  • Essay about Problem set 2
  • Advanced Accounting: Problem Sets Research Paper

Become a StudyMode Member

Sign Up - It's Free