A Company Distributes Repair Parts for High-End Appliances

question 63

Short Answer

A company distributes repair parts for high-end appliances. The annual demand is 81,000 and the company operates 300 days per year. The annual carrying cost is 20% of the item cost, which is $500. The ordering cost is estimated at $60 and the shortage cost is $150.
-If the daily demand is 25 and the lead time in days is 4, what is the reorder point?

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Definitions:

Dividend Growth Model

A method for valuing a stock by using predicted dividends and discounting them back to their present value.

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payments, indicating how quickly dividends are increasing over time.

Financial Loss

A decrease in monetary value, often related to business operations, investments, or unforeseen expenses.

Debt Holders

Debt holders are individuals or entities that have lent money to an organization in exchange for interest payments, holding a claim to the organization's assets until the debt is repaid.