The Operations Manager for Shadyside Savings & Loan orders cash from her home of
ID: 1198941 • Letter: T
Question
The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days.
8. Assuming a thirty-day month, at what point should bills be reordered?
A. 0 bills
B. 417 bills
C. 2,500 bills
D. 10,000 bills
9. Assuming a thirty-day month If she were to order 6,000 bills at a time, what would be the day value between orders?
A. 2.08 days
B. 6 days
C. 8.4 days
D. 14.4 days
10. What is the economic order quantity?
A. 600 bills
B. 949 bills
C. 3,000 bills
D. 6,215 bills
11. What are the annual ordering costs at the economic order quantity?
A. $10,000
B. $15,000
C. $25,000
D. $30,000
Explanation / Answer
Ans:
8) D. 10,000 bills
Average bill per day = 12,500 / 30 = 416.67
A thirty-day month, the point should bills be reordered = 416.67 * 6 = 2, 500 bills
9) D. 14.4 days
The day = 6,000 / 416.67 = 14.4 days
10) C. 3,000 bills
Economic order quantity = 30*100 = 3,000
11) D. $30,000
Annual ordering costs = 3,000 *100 *0.1 = 30, 000
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