Reference no: EM133148051
QUESTION 1
A). Describe at least six (6) costs involved in the Management of Materials
B). If the cost of manufacturing (direct material and direct labour) is 60% of sales and profit is
10% of sales, what would be the improvement in profit if, through better planning and control, the cost of manufacturing was reduced from 60% of sales to 55% of sales?
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Existing
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Improvement
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Sales
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100%
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Cost of manufacturing
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60%
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Other cost
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30%
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Profit
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C). Using the information in Part A, how much would sales have to increase to, to provide the same increase in profits?
QUESTION 2
A) On the average, a firm has 10 weeks of work-in-process, and annual cost of goods sold is $15 million. Assuming that the company works 50 weeks a year:
1. What is the dollar value of the work-in-process?
2. If the work-in-process could be reduced to 7 weeks and the annual cost of carrying inventory was 20% of the inventory value, what would be the annual saving?
B). Warsop Factory sales are $10 million. The company spends $3.5 million for purchase of direct materials and $2.5 million for direct labor; overhead is $3.5 million and profit is $500,000. Direct labor and direct material vary directly with the cost of goods sold, but overhead does not. The company wants to triple its profit.
a. By how much should the firm increase sales?
b. By how much should the firm decrease material costs?
c. By how much should the firm decrease labor cost?
QUESTION 3
A). Describe each of the three basic strategies used in developing a production plan. What are the advantages and disadvantages of each?
B). A company wants to develop a level production plan for a family of products. The opening inventory is 100 units, and an increase to 150 units is expected by the end of the plan. The demand for each period is given in what follows. How much should the company produce each period? What will be the ending inventories in each period? All periods have the same number of working days.
Period
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1
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2
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3
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4
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5
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6
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Total
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Forecast Demand
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100
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120
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130
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140
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120
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110
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Planned Production
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Planned Inventory
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100
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C). For the following data, calculate the number of workers required for level production and the resulting month-end inventories. Each worker can produce 15 units per day, and the desired ending inventory is 9000 units.
Month
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1
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2
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3
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4
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Total
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Working Days
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20
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24
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12
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19
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Forecast Demand
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28,000
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27,500
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28,500
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28,500
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Planned Production
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Planned Inventory
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11,250
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QUESTION 4
A). What is a seasonal index? How is it calculated?
B). Using exponential smoothing, calculate the forecasts for months 2, 3, 4, 5, and 6. The smoothing constant is 0.2, and the old forecast for month 1 is 245.
Month
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Actual Demand
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Forecast Demand
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1
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260
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2
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230
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3
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225
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4
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245
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5
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250
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6
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C). Given the following average demand for each month, calculate the seasonal indices for each month.
Month
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Average Demand
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Seasonal Index
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January
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30
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February
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50
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March
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85
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April
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110
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May
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125
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June
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245
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July
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255
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August
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135
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September
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100
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October
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90
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November
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50
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December
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30
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Total
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D). Using the data in part A and the seasonal indices you have calculated, calculate expected monthly demand if the annual forecast is 2000 units.
Month
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Seasonal Index
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Forecast
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January
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February
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March
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April
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May
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June
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July
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August
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September
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October
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November
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December
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QUESTION 5
A). What are inventories? Why are they important to manufacturing companies?
B). What is the difference between FIFO and LIFO?
C). Given the following data, calculate a level production plan, quarterly ending inventory, and average quarterly inventory. If inventory carrying costs are $6 per unit per quarter, what is the annual carrying cost? Opening and ending inventory are zero.
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Quarter 1
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Quarter 2
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Quarter 3
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Quarter 4
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Totals $
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Forecast Demand
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5000
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7000
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8500
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9500
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Production
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Ending Inventory
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Average Inventory
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Inventory Cost
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If the company always carries 100 units of safety stock, what is the annual cost of carrying it?
D) Perform an ABC analysis on the following set of products.
Item
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Annual Demand
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Unit Cost
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A211
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800
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$9
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B390
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100
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$90
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C003
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450
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$6
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D100
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400
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$100
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E707
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85
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$2,000
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F660
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250
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$320
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G473
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500
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$75
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H921
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100
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$75
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