How much safety stock should the assembly plant hold

Assignment Help Accounting Basics
Reference no: EM131672572

Question: EOQ, uncertainty, safety stock, reorder point. Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 per order. The annual carrying cost is $6.50 per motor. It currently takes 2 weeks to supply an order to the assembly plant.

1. What is the optimal number of motors that Phillips's managers should order according to the EOQ model?

2. At what point should managers reorder the motors, assuming that both demand and purchase-order lead time are known with certainty?

3. Now assume that demand can vary during the 2-week purchase-order lead time. The following table shows the probability distribution of various demand levels:

2429_28.png

If Phillips runs out of stock, it would have to rush order the motors at an additional cost of $5 per motor. How much safety stock should the assembly plant hold? How will this affect the reorder point and reorder quantity?

Reference no: EM131672572

Questions Cloud

What are some hazards associated with frontal activity : What are some hazards associated with frontal activity and what type of fronts should we be the most concerned about?
Study the coverage probability of given confidence interval : Using simulation in SAS or R, study the coverage probability of this confidence interval for different values of p;a and n
Which source or sources published the news item : Which source or sources published the news item? A brief summary of strategic event in focus. How is this news link to the previously studied topics in course?
Determine the optimal number of pairs of shoes per order : EOQ, uncertainty, safety stock, reorder point. Chadwick Shoe Co. produces and sells an excellent-quality walking shoe.
How much safety stock should the assembly plant hold : If Phillips runs out of stock, it would have to rush order the motors at an additional cost of $5 per motor.
Who are the projects direct and indirect stakeholders : Describe the extent to which you believe the author makes a logical case to back up his arguments.
Summarize the key content of given video : Summarize the key content of Video- Agile in Practice: Retrospectives after Iteration and state its provided definition of Agile retrospectives.
What are some reasons that business outputs vary : What are some reasons that business outputs vary? For example why does production output vary?
What is the annual cost of carrying j-pods in inventory : Tech Works will reduce setup time and setup cost. The new setup cost will be $500 per setup. What is the annual cost of producing and carrying J-Pods.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd