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Sedbober [7]
3 years ago
6

Suppose that your firm manufactures toy flying drones. monthly demand for the drones is 46,000 units. setup cost per order is $1

60, and the annual holding cost percentage is 22%. the drones cost $40 to produce and are sold for $89.
a. if you have one warehouse, what is the economic order quantity for the drones? what is the total of the annual setup and holding costs of this quantity?
b. suppose that you have 81 warehouses instead of one, and total demand is equally distributed among the warehouses. if setup and holding costs are the same in the smaller warehouses as they would be for the single large warehouse, what is the eoq for the dolls at each of the 81 warehouses? what is the total of the annual setup and holding costs at each warehouse? what is the total of the company's annual setup and holding costs?
c. using centralized warehousing as in part a means that products must be shipped over longer distances. suppose that shipping costs $1.20 per unit when using one warehouse and $0.90 per unit when using 81 warehouses. which option should the company choose? support your answer.
d. based on your answers to a and b above, if total company demand is d, what is the general formula for the total company eoq cost of using n warehouses instead of one (if the demand is spread evenly over those warehouses)?
Business
1 answer:
3241004551 [841]3 years ago
6 0
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<u>Solution and Explanation:</u>

Calculation of Minimum lease annual payments from (MLP)    

Year  MLP from lessor       Present value                   Present valur of

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1                  $4,703                  1 /(1.08)=0925   $4,350.28

2                    $4,703                  1 /(1.08)^{\wedge} 2=0.857 $4,030.47

3                   $4,703               1 /(1.08)^{\wedge} 3=0.793  $3,729.48

4                 $4,703               1 /(1.08)^{\wedge} 4=0.735  $3,456.71

5                   $4,703              1 /(1.08)^{\wedge} 5=0.680  $3,198.04

   

Total of Minimum

lease Payments  $23,515                                       $ 18,764.97

Add    

Unguaranteed

residual value(ugrv)  4000  1 /(1.08)^{\wedge 5}=0.680  $2,720.00

Asset to be recorded

in the books of lessor

(sum of mlp +ugrv)  $27,515                             $ 21,484.97

Here        

Gross Investment=$27515        

Lease receivable recorded in in the books of lessor(Phelps)(Mimum lease payments + Unguaranteed residual )value = $21484  $21,484      

Walsh (lessee) shoiuld be recorded the amount of present value of minimum lease payments + Guaranteed Residual value=$18764.97 as asset and liabilty            

b) In the books of phelps (lessor)        

2017.01.01  Lease Recievble from walsh ….Dr  $21,484      

                                 to Asset                              $21,484      

(Being Lease receivable recorded )        

In the books of Walsh (lessee)        

2017.01.01  Asset ac ……………Dr  $18,764        

         to Lease Liabilty(Lessor)               $18,764      

(Being the asset and liabilty recorded )                

2017.12.31  Depreciation ……Dr  3752        

                            to Asset                      3752        

(Beint Depreciation recorded charged during the year recorded 18764/5 provided for 5 years)

Here annual payment started from the at the beginning of year i.e annual lease payments start from 01.01.2018.

c)  If expected residual value of $4000 is guaranteed by walsh no changes will be made in classification of lease and there is no chages in asset recorded in Lessor books. But changes will be made in the books of lessee as present value of guaranteed residual value should be added to asset I.e $18764+Present vlue of $4000     $18764+2720=21484

d)   If expected residual value of $3000 is guaranteed by walsh no changes will be made in classification of lease and there is no chages in asset recorded in Lessor books But changes will be made in the books of lessee as present value of guaranteed residual value should be added to asset    I.e $18764+Present vlue of $3000       $18764+$2040=$20804

 

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