An Inventory Item of XYZ Manufacturing Has an Average Daily

question 104

Essay

An inventory item of XYZ Manufacturing has an average daily demand of 10 units with a maximum daily demand of 12 units.The economic order quantity is 200 units.The reorder point is 50 units.Safety stocks are set at 94 units.Required:
a.Determine the inventory level at the time of reordering.
b.Determine the purchase order lead time.
d.Determine the maximum purchase order lead time that the company can experience before it has a stockout.

---

Definitions:

Increase Assets

The act of adding value to a company's assets through acquisitions, improvements, or successful business operations, leading to growth in the company's overall resources.

Decrease Assets

A decrease in assets refers to a reduction in the value or quantity of the resources owned by an entity, which can result from sales, disposals, or consumption in operations.

Accounting Equation

The accounting equation is the fundamental framework of double-entry bookkeeping, stating that Assets = Liabilities + Equity, ensuring financial statements are balanced.

Liabilities

Financial obligations or debts that a company owes to external parties or entities.