What is their holding cost over two weeks

Assignment Help Cost Accounting
Reference no: EM132859164

Question - Consider a consumer packaged goods (CPG) manufacturer that sells a product that is made in China and then transported to Los Angeles via ship. Each week the manufacturer in China makes enough goods to fill up half a container. The rate to ship a half a container from China to Los Angeles is $1,750, while the rate when they can ship a whole container is $3,000.

These goods are shipped to a warehouse in Los Angeles that expects to serve daily demand that follows a normal distribution with mean 1,500 and standard deviation of 100. It costs them $.02 to hold one good for one day at this warehouse and the CPG wants to maintain a 98% service level at this warehouse.

They currently ship a half a container a week from China, which leads to an average lead time of 7 days and a standard deviation of lead time of 2 days. They are considering holding one week's worth of goods in China so that they can ship a full container every other week. In that case, the average lead time is 14 days and the standard deviation of lead time is 4 days.

Required - What is their holding cost over two weeks if they ship from China every week?

Reference no: EM132859164

Questions Cloud

Describe two or three social networking apps : Describe two or three social networking apps that could use a smartphone's GPS capability. Be sure to make clear the benefit of using the GPS in the app in each
Explain the components of a project : Explain the components of a project and the importance of the project statement.
Prepare the journal entries on January : Prepare the journal entries on January 1, 2021, December 31, 2019 for Laselle, the sellerlessee, pertaining to this sale and leaseback transaction
Strategic philanthropy-locus of control-ethical culture : Strategic philanthropy, locus of control, ethical culture, ethical awareness, or normative approach
What is their holding cost over two weeks : The average lead time is 14 days and the standard deviation of lead time is 4 days. What is their holding cost over two weeks
What are the 8 steps to the decision-making process : Provide an instance where you can use the steps in action, for e.g., buying decisions, traveling decisions, dining out decisions etc.
Discuss factors that influence recruiting : 1. Briefly explain in TWO (2) ways how the pandemic of Covid-19 has affected the business structure.
What is the variable cost per ton of beach sand mined : BHP currently mining 280 tons of beach sands per day for 25 days per month. What is the variable cost per ton of beach sand? mined
Describe the basic problems of crm systems : How will organizations change in the years to come to take better advantage of CRM?

Reviews

Write a Review

Cost Accounting Questions & Answers

  What is the meaning of the statement inscribed

What is the meaning of the statement inscribed as decision determination as a critical part of managerial task in light of decision making steps.

  Explain accounting conventions and principles

AC 07 -2: Advanced Accounting Assignment help and solution - Explain accounting conventions and principles used while dealing with various financial aspects

  Discuss what is the break-even quantity per truck

Estimate the average Selling price and average COGS per unit? What is the "break-even" quantity per truck

  Questionarcher daniels midland company is considering

questionarcher daniels midland company is considering buying a fresh farm that it plans to operate for 10 years. the

  Calculate equivalent units for direct materials using the wa

Calculate equivalent units for direct materials using the WA method.Direct Disk Drive Company operates a computer disk manufacturing plant.

  Calculate financial leverage gain or loss for the year

Would the companys operating profit have been $3,600,000 lower?

  Show a qualified opinion on the financial statements

Show a qualified opinion on the financial statements because of the client imposed scope limitation.

  Compute how many units would have to be sold each month

Determine How many units would have to be sold each month to earn a minimum target profit of P18,000? Use the contribution method.

  What was the cost of materials used for packaging

What was the cost of materials used for packaging and mailing services during May? What was the prime cost for May? What was the conversion cost for May?

  Compute the acquisition cost of the machine

What is the impact on the cost of the machine of the interest paid on the 10 percent note? Under what circumstances can interest expense be included in acquisition cost?

  Information regarding the equipment

Tara's Medical Services purchases a large machine. The cost of the equipment is $85,000. It has a trade-in value of $15,000 with an estimated 7-year useful life. If this is the only equipment Tara's Medical Services has, after the one year of use, th..

  What is the amount of the annual pension payment

What is the amount of the annual pension payment that should be used in computing Francisco's accumulated benefit obligation (ABO) as of January 1, 2008?

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