Bernard Company Uses 6,000 Grams of Silver Each Year to Produce

question 2

Essay

Bernard Company uses 6,000 grams of silver each year to produce jewelry. The cost of placing an order is £2,000. The annual cost of holding one gram of silver is £50. Bernard currently places four orders of 1,500 grams each.
Required:
a.
Compute the annual cost of the current inventory policy.
b.
Compute the cost that Bernard would incur if it used economic order quantity.
c.
Compute the amount that Bernard would save if it used economic order quantity rather than the current policy.

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Definitions:

Resources Consumed

The materials, time, energy, and other assets used or expended in the process of achieving a task or goal.

Mission Statement

A formal summary of the aims and values of a company, organization, or individual, guiding its strategies, goals, and actions.

Personal Productivity

Refers to the effectiveness and efficiency by which an individual can complete tasks and achieve goals.

Compass

A navigational instrument used to determine direction relative to the Earth's magnetic poles.