please show all steps 21. D&F reports annual sales of $20 million, cost of goods
ID: 371098 • Letter: P
Question
please show all steps
21. D&F reports annual sales of $20 million, cost of goods sold of $10 million, inventory of $5 million, and net income of $1 million. What is D&F’s monthly inventory turns and month-of-supply?
22. Company C&A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges Company C&A $30 per order and $50 per bottle. Company C&A’s annual holding cost percentage is 40%. Assume Company C&A operates 50 weeks in a year. What is Company C&A’s total ordering and holding cost per year if the order quantity is 200?
23. Restaurant A uses 60 bags of tomatoes each month. The tomatoes are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Restaurant A’s annual inventory holding cost percentage is 40%. If Restaurant A chooses to use the economic order quantity when placing an order for tomatoes, what are its ordering and holding costs per year expressed as a percentage of the annual purchasing cost?
24. Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 250. Store A purchases the product for $10 each unit and sells each for $30. Inventory is salvaged for $5. What is its expected profit if Store A’s order quantity is 400 units?
Explanation / Answer
Q21. Annual Cost of Goods Sold = $ 10 m
Monthly Cost of Goods Sold (monthly COGS) = 10/12 = $ 0.833 m
Average inventory = $ 5 m
Monthly inventory turns = Monthly COGS/Avg inventory = 0.833/5 = 0.167 times per month
Month of supply = 1 / monthly Inventory turns = 1/0.167 = 6 months of supply
Q22. Annual demand, D = 600
Ordering cost, S = $ 30 per order
Holding cost, H = 50*0.4 = $ 20 per unit per year
Order quantity, Q = 200
Annual ordering and holding cost = (D/Q)*S + (Q/2)*H = (600/200)*30 + (200/2)*20 = $ 2,090
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