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Mkey [24]
3 years ago
15

Gentle Ben's Bar and Restaurant uses 6,700 quart bottles of an imported wine each year. The effervescent wine costs $4 per bottl

e and is served only in whole bottles because it loses its bubbles quickly. Ben figures that it costs $25 each time an order is placed, and holding costs are 15 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 134 bottles (closed two weeks per year) with a standard deviation of 30 bottles. Ben would like to use an inventory system that minimizes inventory cost and will provide a 95 percent service probability.
Required:
a. What is the economic quantity for Ben to order? (Round your answer to the nearest whole number.)
b. At what inventory level should he place an order? (Round your answer to the nearest whole number.)
Business
1 answer:
Marat540 [252]3 years ago
7 0

Answer:

a. The answer is:762 bottlé.

b. The answer is: 487 bottles.

Explanation:

a. The economic order quantity is calculated as: \sqrt{(2xDxS/H)} = \sqrt{2 x 6968 x 25)/0.6 = 762 units because: D = annual demand = Weekly demand x week opening per year = 134 x 52 = 6968; S = Cost per order = 25; H = Holding cost per unit = 15% x purchase price = 15% x 4 = 0.6

b. Inventory level to place order:

With the inventory system providing a 95 percent service probability, z level is 1.64 (using the NORM.S.INV function in excel).

So Inventory level to place order = 134 * 3 + 1.64 * 30 * 3^0.5= 487 bottles.

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Answer:

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3 years ago
Vaughn Company's inventory records show the following data: Units Unit Cost Inventory, January 1 11000 $8.80 Purchases: June 18
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Answer:

Vaughn Company

The weighted-average cost per unit is

= $8.04

Explanation:

a) Data and Calculations:

                                  Units    Unit Cost  Total

Inventory, January 1 11,000    $8.80     $96,800

Purchases: June 18  5,000      8.00       40,000

November 8             4,000      6.00       24,000

Total                       20,000                 $160,800

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b) The weighted average method of recording inventory adds up the total units and costs of beginning and current period purchased or manufactured inventory.  The total costs are divided by the total units to obtain the weighted-average cost per unit.

3 0
2 years ago
For the past 16 months, Susie has been paying $126.50 each month to her insurance company. After causing an accident last month,
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Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
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Answer:

See explanation section.

Explanation:

Requirement 1

At first we have to find the original net income.

                              Shelhorse Corporation

              Contribution format income statement

              For the year ended, December 31, 20YY

Sales Revenue (6,100 × $260) = $1,586,000

Less: Variable expense (6,100 × $91) = $555,100

Contribution Margin = $1,030,900

Less: Fixed Expense  $366,000

Net Operating Income = $664,900

Requirement 2

As the marketing manager believes that a $23,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales, the new sales volume = 6,100 + 150 = 6,250 and new fixed expense = $366,000 + $23,000 = $389,000

                          Shelhorse Corporation

              Contribution format income statement

              For the year ended, December 31, 20YY

Sales Revenue (6,250 × $260) = $1,625,000

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Contribution Margin = $1,056,250

Less: Fixed Expense  = $389,000

Net Operating Income = $667,250

The effect on the company's monthly net operating income of this change =  $667,250 - $664,900 = $2,350

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