29) Picture Co manufacturing costs per unit total $50. Ordering costs for the pr

Question

29) Picture Co manufacturing costs per unit total $50. Ordering costs for the product total $60 per purchase Currently, the carrying costs per unit are 25% of manufacturing costs. mpany has one particular product that has an annual demand of 5,000 units. Total order. What is the economic order quantity? A) 219 B) 5,000 C) $50 D) $60 30) Vision Company sells optical equipment. orders 11,400 lenses per year, 220 per week, at $40 per lens. Blitz covers all shipping costs. Vision earns 22% on its cash investments. The purchase order lead tim The following data are available: Blitz Company manufactures special glass lenses. Vision e is 3.0 weeks. Vision sells 315 lenses per week. Relevant ordering costs per purchase order $47.25 Relevant insurance, materials handling, breakage and so on, per year $5.50 What is the reorder point? A) 660 lenses B) 945.0 lenses C) 1318 lenses D) 1605.0 lenses 31) If Premium Company has a safety stock of 480 units and the average daily demand is 68 units, how many days can be covered if the shipment from the supplier is delayed by 4 days? A) 7 days B) 4 days C) 11 days D) 3 days 2 of 13

Explanation / Answer

29 EOQ = (2AB/C)^0.5 A = Annual demand B = Buying or ordering cost C = carrying cost per unit EOQ = (2 x 5000 x 60/12.5)^0.5 EOQ = 219 Ans A 30 Reorder point = weekly sales x lead time in weeks 315 x 3 = 945 Ans B 31 days that can be covered with safety stock 480/68                 7 Days Ans A

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