For supply item ABC, Andrews 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

$10$

Ordering costs

$$100$

Annual unit carrying costs

$$20$

 

 

Required:

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

Bonus

Ellen is paid $$40$ an hour for straight$-$time and $$60$ an hour for overtime. One week she worked $86$ hours, which included $6$ hours of overtime.

Required:

a$.$ What is Ellen's total compensation for the week?

b$.$ What amount of compensation would be reported as direct manufacturing labor?

c$.$ What amount of compensation would be reported as manufacturing overhead?