Delta Manufacturing Is Implementing an Economic Order Quantity (EOQ) Inventory

question 78

Short Answer

Delta Manufacturing is implementing an economic order quantity (EOQ) inventory control system and needs a good estimate of the cost to process a purchase order (PO). It takes 6 total labor hours to process a PO. The average number of SKUs on a PO is 4.2. The average wage for people working in the purchasing department is $20 per hour, plus employee benefits of $4 per hour. Fixed costs for the purchasing department are $350,000 per year assuming a 2,000 hour per employee per year workweek. Given this information, what is a good estimate of the cost to process one stock-keeping unit (SKU)?

Differentiate between simple and compound interest and their effects on investments.

Comprehend the significance of the discount rate in determining the present value of future cash flows.

Recognize the importance of the time value of money in financial decision making.

Calculate the future value of investments given various compounding periods and interest rates.