Birdd Company Uses 450 Units of a Part Each Year

question 59

Essay

Birdd Company uses 450 units of a part each year. The cost of placing one order is $10; the cost of carrying one unit in inventory for a year is $2. Birdd currently orders 90 units at a time.
A. Calculate the annual ordering cost of Birdd's current policy.
B. Calculate the annual carrying cost of Birdd's current policy.
C. Calculate the total cost of Birdd's current policy.
D. Calculate the EOQ for Birdd.
E. Calculate the total inventory-related cost at the EOQ.

Examine the treatment of working capital in calculating project profitability and investment required.

Compare and contrast the assumptions underlying the internal rate of return and net present value methods.

Calculate the net present value of an investment project taking into account all relevant cash flows.

Understand the role of discount rates in the valuation of investment projects.

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Definitions:

New Technology

The latest advancements or innovations in technology that offer improved solutions or efficiency.

Service Sector

A segment of the economy that provides intangible goods or services to consumers, including retail, healthcare, and financial services.

Labour-intensive

Describing a process or industry that requires a large amount of manual work relative to capital or machinery.

Skilled Labour

Refers to workers who have specialized training or skills, typically acquired through education or on-the-job experience, necessary for performing specific tasks or jobs.