A Store Has Collected the Following Information on One of Its

question 79

Essay

A store has collected the following information on one of its products:
Demand = 4,500 units/year
Standard deviation of weekly demand = 12 units
Ordering costs = $40/order
Holding costs = $3/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead-time = 2 weeks
Number of weeks per year = 52 weeks
a.If a firm uses the continuous review system to control the inventory,what would be the order quantity and reorder point?
b.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 300 units.There were no scheduled receipts or backorders at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews. )

Recognize and calculate the net present value (NPV) of an investment.

Distinguish between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).

Explain the role and importance of transfer pricing in multinational corporations.

Know the mechanisms of international payment and credit systems.

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Definitions:

ATC

Average total cost (ATC) is the total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Marginal Cost

The supplementary expense involved in creating an additional unit of a product or service.

Marginal Revenue

The extra revenue a company earns by selling an additional unit of a product or service.

Competitive Market

A market structure characterized by many buyers and sellers where no single entity can dictate or significantly alter the market price.