### Inventory and cost of goods sold

##### Reference no: EM13861555

Inventory

1. Topeka tool Works reports the monthly values for its inventory and cost of goods sold for the most recent twelve months as follow:

 Month Inventory (\$ 000) Cost of Goods Sold (\$ 000) Month Inventory (\$ 000) Cost of Goods Sold (\$ 000) January 1550 1225 July 1250 1100 February 1850 2150 August 1400 1150 March 1300 1550 September 1700 1700 April 1400 975 October 1800 1350 May 2000 1350 November 1200 1400 June 1650 1550 December 900 1000

Calculate the company's inventory turnover.

2.  A company uses ABC analysis to help manage its inventory. Its current stock of inventory reflects the following items, item value, and quantity. Which items would you classify as A items? As B items? As C items?

 Item Part # Item Price Quantity In Stock 142-AZ \$546.00 318 4392-GF \$45.00 1250 86935-ES \$15.35 3546 173-DC \$653.00 1876 999-BA \$199.00 526 7846-NM \$23.00 973 2765-OP \$385.00 790 103-VX \$12.50 4875 2648-YT \$16.75 5185

3. Compute the total annualized inventory holding and ordering costs when the cost per order (S) is \$75, the annual demand (D) is 120,000, the annual carrying charge (i) is 25%, the order quantity (Q) is 1200, and the item's cost is \$50.

4. A coffee shop uses approximately 250 pounds of a particular type of coffee every week. The shop is open 52 weeks a year. The annual carrying charge for the coffee is 20%. If 1 pound of coffee costs the shop \$12.00 and the cost associated with each order is \$39, how many pounds of this coffee should be ordered each time an order is placed in the shop wants to minimize its total annualized inventory-related costs?

5. The following quantity discount is offered to a company that purchases 120,000 units of the product annually.

Order  Quantity Price per Unit

 0-1999 \$50 2000-3999 \$49 4000 or more \$46

Each time an order is placed, the company incurs a cost of \$75. If the company's carrying charge is 25% of the price of the item, what order quantity should it use to minimize its total inventory-related costs?

6. Dayton Electronics demands a part at a daily rate of 40 units. The lead time for replenishment is four days for this item. The standard deviation of demand during the lead time is 8. Dayton Electronics prides itself on having a high level of customer service and strives to achieve a service level of 99%. How much safety stock should Dayton Electronics hold for this item?

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