Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ig Toy, Inc. annually sells 115,000 units of Big Blobs. Currently, inventory is financed through the use of commercial bank loans. Big Toy pays 513.00

image text in transcribed
ig Toy, Inc. annually sells 115,000 units of Big Blobs. Currently, inventory is financed through the use of commercial bank loans. Big Toy pays 513.00 per Big Blob. the cost of carrying this inventory is $3.40 per unit while the cost of placing an order involves expenses of $450 per order. Since Big Blabs are imported, delivery is teneraily 24 days but may be as long as 30 days. To manage inventory more efficiently, the management of Big Toy, Inc, has decided to use the EOQ model plus a iafety stock to determine inventory levels. a. What is the economic order quantity? Round your answer to the nearest whole number. units b. Today is January 1 and the current level of inventory is 11,500 units; when should the first order be placed based on the economic order quantity? Assume 365 days in a yeae. Round your answer to the nearest whole number. Whe first order based on the EOQ model would be placed on the th day. c. Management always wants sufficient Big Blobs so that they never are out of stock. If management considers late deliveries to be the prime reason for being out of stock, what should be the safety stock? Round the number of units sold per day in your intermediate calculations to the nearest whole number. Round your answer to the nearest whole number. units d. According to the above analysis, what are the maximum inventory, the minimum inventory, and the average inventory? Use the rounded values of the EOQ and the safety stock in your calculations. Round your answers up to the nearest whole number. Maximum inventory: units Minimum inventory: units Average imventory: units e. If sales of Big Biobs double, will the average inventory also double? If sales double, the average inventory double

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Innovation Commercialization And Start Ups In Life Sciences

Authors: James F. Jordan

1st Edition

1482210126, 978-1482210125

More Books

Students also viewed these Finance questions

Question

(1 point) Calculate 3 sin x cos x dx.

Answered: 1 week ago