Name six cost categories that are important in managing goods for sale in a retail company.
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JIT production, relevant benefits, relevant costs. The knot manufactures men's neckwear at is Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs \(\$ 25,000\) annually b. Average inventory would decline by \(80 \%\) from the current level of $\$ 1,000,000$ c. I Insurance, space, materials-handling, and setup costs, which currently total \(\$ 400,000\) annually, would decline by \(20 \%\) d. The emphasis on quality inherent in JIT production would reduce rework costs by \(25 \%\). The Knot cur renty incurs \$160,000 in annnual rework costs e. Improved product quality under JIT production would enable The Knot to raise the price of its product by S2 per unit The Knot sells 100,000 units each year The Knot's required rate of return on inventory investmentis \(15 \%\) per year 1\. Calculatet the net benefit or cost to The Knotifit adopts JIT production at the Spartanburg plantt 2\. What nonfinancial and qualitative factors should The Knot consider when making the decisision to adopt JIT production? 3\. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could uss to evaluate and control JIT production. What would be the benefit of The Knot implementing an enterprise resource planning (ERP' system?
The order size associated with the economic-order-quantity (E00) model will necessarily decline if a. Ordering costs rise b. Storage costs rise c. Insurance costs for materials in storage fall d. Stockout costs rise
Supply-chain effects on total relevant inventory cost. Peach Computer Co. outsources the production of motherboards for its computers. It is currently deciding which of two suppliers to use: Alpha or Beta. Due to differences in the product failure rates in the two companies, \(5 \%\) of motherboards purchased from Alpha will be inspected and \(25 \%\) of motherboards purchased from Beta will be inspected. The following data refer to costs associated with Alpha and Beta: 1\. What is the relevant cost of purchasing from Alpha and Beta? 2\. What factors other than cost should Peach consider?
E00 for manufacturer. Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost of \(\$ 1\) per unit. Sk 8 requires a \(15 \%\) annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is \(\$ 0.17\) per unit per year. The relevant ordering cost per purchase order is \(\$ 38.40\) 1\. Calculate Sk8's E00 for the wheel bearing. 2\. Calculate Sk8's annual relevant ordering costs for the E00 calculated in requirement 1. 3\. Calculate Sk8's annual relevant carrying costs for the E00 calculated in requirement 1. 4\. Assume that demand is uniform throughout the year and known with certainty so there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Sk8's reorder point for the wheel bearing.
What assumptions are made when using the simplest version of the economic- order-quantity (E00) decision model?
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