Compact Appliances Uses a Standard Part in the Manufacture of Several

question 53

Multiple Choice

Compact Appliances uses a standard part in the manufacture of several of its air conditioners.The cost of producing 40,000 parts is $110,000,which includes fixed costs of $50,000 and variable costs of $60,000.The company can buy the part from an outside supplier for $4.00 per unit,and avoid 40% of the fixed costs. If Compact Appliances makes the part,how much will its operating income be?

• A)$30,000 greater than if the company bought the part
• B)$80,000 greater than if the company bought the part
• C)$20,000 greater than if the company bought the part
• D)$120,000 greater than if the company bought the part

Differentiate between continuous review and periodic review inventory policies.

Calculate safety inventory and reorder points (ROP) for given demand distributions.

Comprehend how inventory policies affect product availability measures.

Understand the relationship between lot size reduction, fixed order cost, and optimal lot size.

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Definitions:

Mean Weights

The average weight calculated by adding all the weights together and dividing by the number of weights.

Navel Oranges

A type of orange that is characterized by the growth of a second fruit at the apex, which protrudes slightly and resembles a human navel.

Standard Deviation

This quantifies how much data values diverge or scatter from the average.

Standard Deviation

A parameter quantifying the divergence or scattering of data points in a dataset, reflecting the distance of these points from the average.