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slava [35]
3 years ago
6

You run a coffee shop where demand is constant week to week. You use 10 bags of roasted coffee each week. Currently, you order w

hole roasted coffee beans from an out-of-town supplier who charges $20 per bag and a fixed cost of $100 per delivery. Storage for each bag per month is estimated at $1. Assume your coffee shop operates for 52 weeks and 12 months per year. Assume there are no lead times.
Required:
a. Under these costs, what is the optimal order size (in bags)?
b. How often (in months) do I place an order under my solution to part a?
c. What are my annual total costs (including purchasing costs) under my solution to part a?
Business
1 answer:
loris [4]3 years ago
5 0

Answer: See explanation

Explanation:

a. Under these costs, what is the optimal order size (in bags)?

Periods per year = 52 weeks.

Weekly demand = 10bags

Annual demand, D = 10 × 52 = 520

Set up cost, S = $100

Item cost = $20.00

Holding cost per year, H= $12.00

We'll then calculate the economic order quantity, Q which will be:

= ✓2×S×D/H

= ✓(2×100×520/12

= ✓104000/12

= ✓8667

= 93

Optimal order size = 93 bags

b. How often (in months) do I place an order under my solution to part a?

Time between orders will be:

= Period per year / Orders per year

= 12 / 5.59

= 2.15

c. What are my annual total costs (including purchasing costs) under my solution to part a?

Annual total cost will be:

= Holding cost + Order cost + Purchase cost

= $11,517.14

Note that:

Orders per year = D/Q = 520/93 = 5.59

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Answer:

See explanation section

Explanation:

Give

The cost value for each of the inventory item is as follows:

Product           Cost Price

D                        $88

E                        $94

F                        $94

G                        $94

H                        $59

I                          $42

Now, we determine the net realizable value for each of the product:

Net Realizable Value = Selling price - Cost to compete - Selling costs

Product           Net Realizable Value

D                       $93

E                        $73

F                        $70

G                        $41

H                        $82

I                          $47

Now, using the LCNRV (Lower of cost or Net Realizable Value) rule, the proper unit value for balance sheet reporting purposes at December 31, 2020, for each of the inventory items -

Product           LCNRV

D                        $88

E                        $73

F                        $70

G                        $41

H                        $59

I                          $42

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3 years ago
Preston Industries has two separate divisions. Each division is in a separate line of business. Division A is the largest divisi
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Answer:

The correct answer is D. Assign appropriate, but differing, discount rates to each project and then select the projects with the highest net present values.

Explanation:

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Except in exceptional cases, the discount rate is positive because before the promise of receiving money in the future we have the uncertainty of whether we will receive it or not, since there may be a problem that prevents us from receiving that money. Therefore, the farther the money we are going to receive, the less it will be worth now.

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