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Smart Products buys 300000 units of a crucial input per year from a supplier that fulfills its orders within two days of receiving them Smart Products submits its orders directly to the supplier

Smart Products buys 300,000 units of a crucial input per year from a supplier that fulfills its orders within two days of receiving them. Smart Products submits its orders directly to the supplier through a web interface, so its lead time is the supplier’s two day turnaround time. Each order costs Smart Products about $500 to place, while carrying costs are about $60 per unit per year. The company seeks to maintain a five day usage level in a safety stock.

 

36.What is Smart Product’s economic order quantity (EOQ) for this input?

a.2236 units

b.707 units

c.822 units

d.1581 units

 

 

 

37.What is Smart Products’s carrying cost at the EOQ?

a.$49,320

b.$313,655

c.$42,420

d.$134,160

 

 

 

38.At what inventory level of this input should Smart EOQ reorder?

a.2236 units

b.5754 units

c.4110 units

d.1644 units

 

 

 

39.Which would improve Smart Product’s total cost at the EOQ more, a 15% reduction in carrying costs or a 10% reduction in order costs?

a.decreasing order costs decreases total cost by $10,062

b.decreasing order costs decreases total costs by $6,700

c.decreasing carrying costs decreases total costs by $10,062

d.decreasing carrying costs decreases total costs by $6,700

 

 

 

40.Refer to Smart Products. If management determines that a four day safety stock is appropriate for this input, what is the new reorder point?

a.822 units

b.3288 units

c.4932 units

d.4110 units

 

 

 

Sawtooth Industries

Sawtooth Industries uses an economic order quantity (EOQ) model to manage its inventory investment. The company uses about 25,000 molded plastic assemblies each year. Order costs for these are $150 per order, while carrying costs are about $250 per unit per year. Assume a 365 day year.

 

41.What is Sawtooth Industries’ economic order quantity (EOQ) for these parts?

a.122 units

b.289 units

c.224 units

d.173 units

 

 

 

42.Using the EOQ, how many orders will Sawtooth place each year?

a.about 68

b.about 145

c.about 86

d.about 112

 

 

 

43.What is Sawtooth’s total cost at the EOQ?

a.$43,375

b.$21,750

c.$49,025

d.$46,000

Feb 13 2020 View more View Less

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