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I need help answering this questions please and the here is the equations for solving the questions ( two pics below ) QUESTION (20 Marks)
I need help answering this questions please
QUESTION (20 Marks) Electric spark Co., uses 60,000 of component Zima. The cost of placing an order is estimated at $17.28 per order. The annual holding cost is 20% of the purchase price of $20 per unit. The following information is provided to you by the management accountant to use in your analysis: The Normal usage 200 units per day Maximum usage 280 units per day Minimum usage 120 units per day Reorder period 20 to 30 days Required: 1. Determine the EOQ using the equation method (4 marks) 2. Calculate the total cost of inventory per year, in case the company decided to use the EOQ. (8 marks) 3. Electric spark has been offered a 2 per cent discount on the cost if it places orders in quantities of 20,000. Discuss whether the company should accept the discount and place larger orders .(8 marks) 3. Costs included in the hosts of stock are incremental costs for such items as insurance obsolescence, spoilage, and breaking of capital (or requireturn on investment), (5 marks) 4 The total costs for B Al-Manama if it orders the EOQ of 3,000 units are: (5 marks) ist of buying the KGS - $200 x 72,000 = $14,400,000 ost of ordering - 172,000/3,000) * 375 = $ 9,000 ost of holding - 13.000/21*69,000 Total Costs - $14,418,000 The total costs for Biscay if it orders 18,000 units are: (5 marks) Cost of buying the KGS - $200 x 72,000 x 0.99 = $14,256,000 Cost of ordering = 172,000/18,000) 375 - $ 1.500 Cost of holding - (18,0002] 6 = $ 54,000 Total Costs = $14,311,500 Ordering 18,000 units will, therefore, save $14,418,000 - $14,311,500 - 106,5005 over a years expected, the holding cost increases (from 9,000 to 54,000), but this is more than compensated by he duced cost of buying and ordering. Al-Manama should take the discount. (2 marks) Part B:Choose Allestion out of two-50 marks -Equation n method. (6 marks) b-Tabular method, by developing the following table :( 12 marks) No. of orders 1 10 20 30 90 120 Order size Average stock Carrying (Holding) costs Order costs Total costs 2. Plot your answer to (1) on a graph displaying the order size and total costs: 5 marks) 3. Give examples of costs Inchaded in annual carrying (holding costs of stock when using the FOQ decision model( 5 marks) 4. Al-Manama has been offered a I per cent discount on the cost if it places orders in quantities of 18,000. Discuss whether the company should accept the discount and place larger orders, show your workings.(12 marks) 1 BOQ Where: D-Rep the annual demand for the inventory item presents the cost of placing an order - Represents the cost of holding one unit of inventory for one year. 1. Determine the EOQ: - Using the equation method: (3 marks for the formula (& 3 marks for calculations) 100= (2 x Demand x Cost per order) Holding cost per unit (2 x 72,000 x 375) E0Q= and the here is the equations for solving the questions ( two pics below )
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