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Ngu,
the ordering cost is as usual, you dont need to work out your buffer stock in this.
Buffer cost is to do with HOLDING of the stock as the holding cost per unit per year.
ordering cost= cost of ordering x demand / EOQhope that helps
I hope I did it correctly.
Holing cost, with buffer stock: (10000 x $1) + ( $1 x EOQ value / 2) = whatever it was I don’t remember!
My assumption is that the company keeps buffer stock throughout the year. Then, you need to find the holing cost based on the quantity given by the EOQ and add them all together. I hope it’s correct!
However I tried to stay calm, I started panicking once I turned the page, I knew I was shooting myself in the foot, but I could not help myself.
I lost some easy marks to my stress.
Hi all,
Does anyone know what would be a good combination if you wanted to do 2 Professional papers in June 2014?
Junekiarie:
the company keeps 40% of the monthly supply for buffer inventory. so 10,000 units times $1 plus your holing cost based on EOQ
you don’t need to recover it when the project is going on. the question tells you the machinery for example will be replaced. this means you don’t need to recover the working capital. But today the project would terminate at the end of the period, so you needed to recover working capital. Hope you did!
I found lease a better option than buy. However, my mind went totally black as I forgot to inflate accumulatively! How stupid am I?
I got 0.89 for my beta, which i found a bit strange. But it’s good to see at least one person got the same figure
Did we have to work out the EAC for buy or lease?
The question was quite misleading as it didn’t mention how many years the lease payments are made! perhaps I didn’t see it, did you?
