Question

at $11.30; 5,750 units of Material at $5.90 each. The receiving report indicates that the units ordered were received except for material 4-97, which was 900 units short. In addition, 200 units of Material 3-87 were defective and were returned to the supplier. A debit memorandum was prepared. -A) Calculate the economic order quantity and the recorder point. (Obj. 3). The fol- lowing information relates to materials purchases for the Edwards Company: Material B 63,375 lb $10 Material A 4,000 lb $10 $2 250 lb 20 days 15 lb Annual demand for material Cost to place an order Cost to carry an item Safety stock Lead time Daily usage $3 750 lb 10 days 250 lb instructions 1. Calculate the economic order quantity (EOQ) for each material. 2. Calculate the reorder point for each material. 3. How many days late can an order be before the Edwards Company will run out of each material? 4. How many times during the year will the Edwards Company have to place an order? Record raw materials purchases. (Objs. 4-9). Western Manufacturers, 231 West Su- perior Street, Duluth, Minnesota 55802, has an effective system of internal control. During May 2006, the following transactions took place. 3)

Answer 1

Solution 0 Calculation of economic order quantity (209): Material : Annual demand D 4,000 16 Cost to place an order, 5 - $10 Cie; ordering cost) $2 Cie; cost to carry an item) we've, Economic Order Quantity, 200 = H Holding cost 1 2xDXS H 2x6,000 lb* $10 $2 40,000 lb Material A: Eoq = 200 lb D Material B Annual demand, 63,375 lb Cost to place an order, s = $ 10 Cie; ordering cost) Holding cost, H = $3 Cie; cost to carry as item) we've Economie Onder Quantity, 800 2xDXS H 2x 63,375 1b * $10 $3 ſh 422,500 lb 650 lb Material B: EoQ.

Solution Ⓡ: Calculation of reorder point: Material A we've; Reorder point = (Daily usage x Lead time) + safety stock - (15 16 x 20 days) + 250 lb 300 16 +250 lb Reorder poent: 550 lb Materjal B we've; Reorder point = (Daily usage x Lead time) + safety stock = (250 16 x 10 days) + 750 lb 2500 lb + 750 lb Reorder point. 3250 lb

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