Reference no: EM13836252
Cartwright Computing expects to order 600,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $30; and the firm’s inventory carrying costs is equal to 15 percent of the purchase price. (Assume a 360-day year.)
a. What is the economic ordering quantity for chips?
b. If Cartwright holds a safety stock equal to a 30-day supply of chips, what is its average inventory level?
c. Assume that Cartwright holds a safety stock equal to a 30-day supply of chips. What is the maximum amount of inventory that will have on hand at any time, that is, what will be the inventory level right after a delivery is made?
d. How many orders should Cartwright place during the year?
e. If the lead time for placing an order is 5 days, and Cartwright holds a safety stock equal to a 30-day supply of chips, then at what inventory level should an order be placed?
f. If Cartwright holds a safety stock equal to a 30-day supply of chips, what is Cartwright’s minimum cost of ordering and carrying inventory?
|
Find the upper-lower bounds on the prices of european call
: Find the upper and lower bounds on the prices of the European Call and the Put options and then find their ranges. (i.e. all possible values).
|
|
Determine its optimal average cash balance
: The Duckett Group is trying to determine its optimal average cash balance. The firm has determined that it will need $8,100,000 net new cash during the coming year. According to the Baumol model, what should be Duckett’s average cash balance?
|
|
Create a hedge against rising interest rates
: Hedging: The Zinn Company plans to issue $12,000,000 of 20-year bonds I June to help finance a new research and development laboratory. Use this information to create a hedge against rising interest rates.
|
|
Issues floating-rate debt and brence issues fixed rate debt
: Cater enterprises can issue floating-rate debt at LIBOR + 2.50% or fixed rate debt at 9.50%. Brence Manufacturing can issue floating-rate debt at LIBOR + 4.60% or fixed rate debt at 11.00%. Suppose Cater issues floating-rate debt and Brence issues fi..
|
|
What is the economic ordering quantity for chips
: Cartwright Computing expects to order 600,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; What is the economic ordering quantity for chips? How many or..
|
|
What would be the incremental cost of carrying receivables
: Van Doren Housing expects to have sales this year of $18 million under its current credit policy. The present terms are net 30; the days sales outstanding (DSO) is 48 days; and the bad debt loss percentage is 4 percent. What would be the incremental ..
|
|
Cost of short-term credit
: Fair cross Farms harvests its crops four times annually and receives payment for its crop 90 days after it is picked and shipped. However, planting, irrigating, and harvesting must be done on a nearly continual schedule.
|
|
Calculate the average net cash flow during the month
: Tierney Enterprises is constructing its cash budget. Its budgeted monthly sales are $5,000, and they are constant from month to month. 40% of its customers pay in the first month and take the 2.5% discount, while the remaining 55% pay in the month fo..
|
|
Restricted or relaxed current asset investment policy
: Hardwig Inc. is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales are expected to total $5,200,000, its fixed assets turnover ratio equals 4, and its debt and common equity are each 60% of ..
|