Calculate the economic ordering quantity

Reference no: EM13196324

1. Novelty Gifts, Inc. is experiencing some inventory control problems. The manager,

Wanda LaRue, currently orders 5,000 units four times each year to handle annual demand of 20,000 units. Each order costs $15 and each unit costs $1.50 to carry. Ms. LaRue maintains a safety stock of 200 units.

a) What is Novelty Gifts' current total annual inventory cost?

b) Calculate the economic ordering quantity (EOQ).

c) What is average inventory under EOQ if Ms. LaRue maintains a safety stock of 200 units.

d) Calculate total annual inventory cost under EOQ.

2. From the following income statement, calculate:

a) Degree of financial leverage.

b) Degree of operating leverage.

c) Degree of combined leverage.

Income Statement
for the year ended 12/31/03

Sales $440,000

TVC 240,000

Fixed costs (FC) 96 000

EBIT $104,000

Interes 19,200

EBT $ 84,800

Taxes @ 35% 29,680

Net income $ 55 120

Shares outstanding 16,000

EPS $ 3.44

3. Firm X is considering a project and its analysts have projected the following outcomes and their probabilities.

Outcome Probability of Outcome Assumptions

$5,250 25% pessimistic

$7,800 45% moderately successful

$13,500 30% optimistic

Reference no: EM13196324

Questions Cloud

Global warming theory : The Wabash Watershed from 1961 to 1990, Whta does this data tell about this region over this time period, and what does it indicate about the future? Does this tell us anything, positively or negitively about global warming theory?

Dicussing the case with another provider of services : In many cases, as we will learn, dicussing the case with another provider of services (e.g. the hospital) if that provider is going to give treatment is acceptable under HIPAA (privacy laws) even without consent.

State the partial pressure of water over the solution : If the vapor pressure of pure water at 25 C is 23.8mmHg What is the partial pressure of water over the solution? Assume ideal behavior for the solution.

Explain the effects of increased price of gasoline. : After Iraq invaded Kuwait gasoline prices rose dramatically – up to 50%. These were many effects of the increased price of gasoline.

Calculate the economic ordering quantity : What is Novelty Gifts' current total annual inventory cost and calculate the economic ordering quantity (EOQ) - what is average inventory under EOQ if Ms. LaRue maintains a safety stock of 200 units

State a plot of the reciprocal concentration of chemical a : A plot o f the reciprocal concentration of chemical A versus time yielded a straignt line with a slope

State the transport of glucose from the intestine : the transport of glucose from the intestine across the intestinal cell into the blood. Identify each step and their order by dragging the description into the appropriate box.

Find the number of hits for each player : 2 baseball players got a total of 352 hits. One had 12 more hits than the other. Find the number of hits for each player.

Give reasons to increase the elastic demand : Glenda begins drinking more grape juice, which is less expensive, but tastes just as good to her. In this case, Glenda’s elastic demand is.

User Account

All Pages