<span>If Mr Stevens decides to open the sporting goods store his opportunity cost is the rent income from the agreement with the person who would like to open a gym. He looses out on a steady rental income.</span>
Answer:
Increase in assets of $8,000 and an increase in liabilities $8,000
Explanation:
The effect of the transaction is shown below with the help of the accounting equation
Liabilities + Owner equity = Assets
$8,000 + 0 = $8,000
($10,000 - $2,000)
Therefore from the above calculation, we can see that there is an increase in assets also there will be an increase in liabilities but no effect on stockholder equity
Answer:
- Economic order quantity= 1406 units
- Safety Stock= 630 units
- Reorder Point= 14130 units
Explanation:
Given Demand D= 78,000units/year
Ordering cost S = $38.00/order
Holding cost H = $3.00unit/year
Average lead time = 9 weeks
Standard deviation of weekly demand = 120 units
a) Economic order quantity:
EOQ = \sqrt{(2*D*S)/H}
EOQ = \sqrt{(2*78000*38)/3}
1405.7 = <u>1406 Units</u>
b)<u>
Safety Stock:</u>
Weekly demand = 78000/52 =1500 units
Standard deviation of weekly demand = 120 units
Lead time is 9 weeks
Using the normsinv() in excel the Z value for the desired 96% service level is 1.75
Safety stock = z\sigma _{d}\sqrt{L}
= 1.75*120*\sqrt{9}
= 630 units
Reorder point = average lead time demand + safety stock
= lead time * weekly demand + saftey stock
= 9*1500 + 630
= 13500 + 630
Reorder point = 14130
Answer:
The 1st plant with a storage reservoir is a better option as compared to that of the 2nd plant.
Explanation:
Suppose the factor for variation in hourly demand is 2 So the average hourly demand is given as
Average Hourly Demand=Factor x Average Daily Demand
AHD=2 x 18000 m3
AHD=36000 m3
For the first pump
The Quantity in storage tank is 3975 m3
So the amount of pumping required is
For this value the pump will work for following hours
So the pump 1 can complete the demand of the town by working for 18.3 hours.
Now in order to complete the demand, the second pump is given as
For this the pump will work for as
So the pump 2 requires 16 hours to complete the demand of the town.
Here it is important to note that the realistic demand of the water can vary from the average value and thus when there is a drastic requirement of water in certain cases, the pump 2 will fail. Also pump 2 has to be run continuously and will produce excessive water which will be wasted if the hourly demand is less than that of the production value.
In context of this, the 1st plant with a storage reservoir is a better option as compared to that of the 2nd plant.
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