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Reorder Point

The document provides inventory and reorder level data for Pluto Company. It includes information like the economic order quantity, average and maximum daily use, lead time, safety stock, and costs of carrying inventory and placing orders. This data can be used to calculate the reorder point, average inventory, maximum inventory, and cost of placing one order.

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Rosemarie Cruz
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129 views4 pages

Reorder Point

The document provides inventory and reorder level data for Pluto Company. It includes information like the economic order quantity, average and maximum daily use, lead time, safety stock, and costs of carrying inventory and placing orders. This data can be used to calculate the reorder point, average inventory, maximum inventory, and cost of placing one order.

Uploaded by

Rosemarie Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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17.

Pluto Company has developed the following data to assist in controlling one
of its material inventory items:

Economic order quantity 1,000 liters


Average daily use 100 liters
Maximum daily use 120 liters
Working days per year 250 days
Safety stock 140 liters
Cost of carrying inventory P1.00 per liter per year
Lead time 7 working days
What is the reorder point?

a. 840 liters
b. 800 liters
c. 900 liters
d. 830 liters

18. Using the data in No. 17, what is the average inventory?

a. 640 liters
b. 650 liters
c. 740 liters
d. 700 liters

19. Using the data in No. 17, what is the maximum inventory assuming normal
lead time and usage?

a. 1,140 liters
b. 1,400 liters
c. 1,200 liters
d. 1,240 liters

20. Using the data in No. 17, what is the cost of placing one order?
a. P20
b. P25
c. P30
d. P35
21. The Cloth Center, Inc. buys and sells fabrics to a wide range ofChapter
2 industrial and consumer users. One of the product it carries is2
denim cloth, use in the manufacture of jeans and carrying bags. The
supplier for the denim cloth pays all incoming freight. No incoming
inspection of the denim is necessary because the supplier has a
track record of delivering high-quality merchandise. The
purchasing officer of the Cloth Center, Inc. has collected the
following information:

Annual demand for denim cloth 20,000 yards


Ordering costs per purchase order P160
Carrying costs per year 205 of purchase costs
Safety stock requirements None
Cost of denim cloth P8 per year
The purchasing lead time is 2 weeks. The Cloth Center is open 250
days a year (50 weeks for 5 days a week)

What is the EOQ for denim cloth?

a. 2,000 yards
b. 2,200 yards
c. 1,500 yards
d. 2,500 yards
the number of orders that will be
22. Using the data in No. 21, what is
placed each year?

a. 10 orders
b. 12 orders
c. 15 orders
d. 20 orders
23. Using the data in No.

a. 800 yards
b. 400 yards Chapter
3 c. 500 yards 2
d. 700 yards
Chapter
4 2

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