Reference no: EM131799507
Question: Foods Galore is a major distributor to restaurants and other institutional food users.
Foods Galore buys cereal from a manufacturer for $24 per case. Annual demand for cereal is 215,000 cases, and the company believes that the demand is constant at 860 cases per day for each of the 250 days per year that it is open for business. Average lead time from the supplier for replenishment orders is eight days, and the company believes that it is also constant. The purchasing agent at Foods Galore believes that annual inventory carrying cost is 20 percent and that it costs $52 to prepare, send, and receive an order.
a-1. How many cases of cereal should Foods Galore order each time it places an order? (Round your answer to the nearest whole number.)
a-2. What will be the average inventory? (Round your answer to 1 decimal place.)
a-3. What will be the inventory turnover rate? (Round your answer to 1 decimal place.)
a-4.Calculate the total annual cost based on a product cost of $24/unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Foods Galore conducts an in-depth analysis of its inventory management practices and discovers several flaws in its previous approach. First, they find that by ordering 13,000 or more cases each time, they can obtain a price of $22 per case from the supplier.
b-1. Calculate the total annual cost based on a product cost of $22/unit.
b-2. What order quantity should Foods Galore place?
b-3. How much will they save annually by ordering the quantity shown in Part b-2. instead of Part a-1? (Round your answer to 2 decimal places.)
c. In its analysis, Foods Galore determined that demand and lead time are not constant. In fact, demand has a standard deviation of 63 cases per day and lead time has a standard deviation of 1.8 days. Foods Galore management wants to evaluate two service level policies. One policy would incur a 5 percent risk of stockout while waiting for replenishment, the other only a 1 percent risk of stockout. What would be the cost of carrying the safety stocks for each of the two policies? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
What is the corporate veil and under what circumstance
: What is the corporate veil and under what circumstance is an Australian court likely to lift it
|
Is herbalife a legal multi-level marketing company
: Is Herbalife a legal multi-level marketing company or an illegal pyramid scheme? Cite evidence regarding their financial model to support your answer.
|
Revise the accusatory
: The following sentences need to be overhauled before being included in a letter. Identify lhe weakness in each statement, and revise as needed.
|
Prepare flexible selling and administrative expenses budget
: Prepare a flexible selling and administrative expenses budget for May 2011, for sales volumes of $120,000, $160,000, and $200,000
|
What order quantity should foods galore place
: Foods Galore buys cereal from a manufacturer for $24 per case. Annual demand for cereal is 215,000 cases, and the company believes that the demand is constant.
|
What is the optimal sequence
: The sequence is first printing and then binding. Processing times for each work centre are shown in table 8.0.
|
Discuss purposes of the individual alternative minimum tax
: Which of the following is not an adjustment or tax preference item for purposes of the individual alternative minimum tax
|
What are important trades-offs involving the inputs
: Many times trade-offs are necessary to increase productivity. What are important trades-offs involving the inputs to productivity?
|
Why would make more sense in current position
: Why would make more sense in my current position. The results that I have received were mostly agreeable, and I would say that to a more broad result.
|