Essay About Lead Time And Cost Of Each Coffee Maker

Accounting Question Answers
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QUESTION 1:Jaya Mart needs 1000 coffee makers per year. The cost of each coffee maker is RM78. Ordering cost is RM100 per order. Carrying cost is 20% of per unit cost. Lead time is 5 days. Jaya Mart is open 360 days in a year.What is the EOQ level?EOQ =   √ 2SO / C[pic 1]              [pic 2]         =   √ 2 X 1000 X 100 /15.60         =   113 unitsHow many times per year does the store reorder?S / Q= 1000  / 113                              360 / 9= 9 times                                   = 40 daysThe company will place the store reorder at every 40 days.What is the re-order point?Reorder point  = ( S / time period per year )  X Lead time                        = ( 1000 / 360 ) X 5                        = 14 unitsWhat is the total annual cost if the EOQ quantity is orderedTotal annual cost = ( Q / 2 X C) + (S / Q X O)                             = ( 113/2  X  15.60 )  + ( 1000/113  X  100 )                             = RM 1766.36QUESTION 2:Hirajuki Distributors has determined the following inventory information for its operation:Annual unit usage is 500,000 units.The carrying cost is 10% of the purchase price of the goods. The purchase price is RM 5 per unit. The ordering cost is RM 100 per order.The desired safety stock is 5,000 units.Delivery time is four weeks. Assume Hirajuki’s operation is 50-week year.What is the EOQ level?[pic 3]EOQ =   √ 2SO / C         =   √ 2 X 500,000  X 100 / 0.50[pic 4]         = 14,142 unitsWhat is the average inventory?Average inventory = Q / 2 + safety sock                                = 14,142 / 2  +  5000 unit