Lipscomb is set to establish a reorder policy for his remote snack bar located o
ID: 2741641 • Letter: L
Question
Lipscomb is set to establish a reorder policy for his remote snack bar located on Vacation Island. He sells 10 cases of soda per day and has a lead-time for delivery of one week. Occasionally, bad weather or mechanical difficulty can delay his delivery by up to three days. At what point should Lipscomb reorder (how many cases on hand) if he wants to also compensate for unexpected order delays
A. 30 cases B. 70 cases C. 100 cases D. There is not enough information to answer this question
BarnBurner Music, a music publishing firm located in Tennessee, bills its clients on the first of the month. For example, any sale made in the month of July is billed August 1 and is due September 1. Clients traditionally pay as follows: 50% at the end of the first month, 40% at the end of the second month, 8% at the end of the third month, and 2% default on their bills. The firm's CEO wants to know the anticipated cash flow for April. Use the following information to estimate April cash flows.
First Quarter Actual Billings Second Quarter Anticipated Billings January February March April May June $88,000 $74,000 $96,000 $99,000 $82,000 $63,000
A. $96,000 B. $77,600 C. $84,640 D. $99,000
Explanation / Answer
Lipscomb is set to establish a reorder policy for his remote snack bar located on Vacation Island. He sells 10 cases of soda per day and has a lead-time for delivery of one week. Occasionally, bad weather or mechanical difficulty can delay his delivery by up to three days. At what point should Lipscomb reorder (how many cases on hand) if he wants to also compensate for unexpected order delays
ANSWER = 30 CASES
BarnBurner Music
April cash flows
January month billing received in April= $99000* 8 % = $7040
Feb month billing received in April = $74000 * 40% = 29600
March month billing received in April = $96000 * 50 % = $48000
Total cash flows in april = $ 7040 + $29600 + $48000
= $84640
Answer = C. $84,640
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