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Solution Library
Inventory in Cost Accounting - Problem
Question:
Consider the following data pertaining to a distribution center.
|
Parameter |
Value |
|
Mean Weekly Demand |
100 |
|
Standard Deviation of Weekly Demand |
30 |
|
Lead Time |
2 Weeks |
|
# of weeks in year |
50 |
Ordering cost: $50 /order
Holding cost: $4 /unit /week.
Cycle service level: 97%
|
Measure |
Computation |
|
order quantity
|
|
|
cycle inventory
|
|
|
safety inventory
|
|
|
reorder level
|
|
|
annual inventory holding cost
|
|
|
number of orders per year
|
|
|
annual ordering cost
|
|
Summary:
The question is related to cost accounting in finance. It deals with measures such as Order Quantity, Cycle Inventory, Safety Inventory, Reorder Level, Annual Inventory Holding, Annual Ordering Cost, etc. All these measures are calculated according to given cost and time.
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