Non-zero lead time, Managerial Accounting

Assignment Help:

Non-zero lead time (determining reorder point)

This basic EOQ model assumes that the suppliers lead time is zero (i.e. goods are delivered immediately on the day the order was made).  In reality, however, supplies are rarely ordered and received on the same day. Accordingly, orders must be placed some time before stocks reach zero.  In world of certainty (when demand is continuous and constant) the reorder point will be the number of days/weeks lead time multiplied by the daily/weekly usage during the period.

That is, Reorder point = Average daily usage x Lead time in days.

1369_curve.jpg

Note: The reorder point has no cost implications, since it does not affect the EOQ.

 


Related Discussions:- Non-zero lead time

Cost estimation and management of overhead cost, How might a company use re...

How might a company use regression results to manage overhead costs?

Accounting Ratios, Explain TWO limitations of using accounting ratios to as...

Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how each limitation may be improved

Lease accounting, question:lease accounting implicit rate unknown,20%increm...

question:lease accounting implicit rate unknown,20%incremental rate leaseterm 4 years,find implicit rate using trial and error method.i know nothing about trial and error method in

Strategic plan, How to write introduction on strategy plan

How to write introduction on strategy plan

The break even point in dollorsales for rice company, the break even point ...

the break even point in dollorsales for rice company is48,000 and the company's contribution margin ratio is 40 percent. If Rice Company desires a profit of $84,000, how much wou

Determine the objectives of ratio analysis, Objectives of ratio analysis ...

Objectives of ratio analysis 1) Measuring the profitability: we can measure the profitability of the business by calculation gross profit net profit expenses ratio and other.

Describe the algebraic method of the break even point, Algebraic method of ...

Algebraic method of the break even point The break even point can be computed by the following method: a) Units of sales volume . b) Budget total or in terms of money va

Joint product decisions, JOINT PRODUCT DECISIONS When a manufacturing C...

JOINT PRODUCT DECISIONS When a manufacturing Company carries out a process operation in which 2 or more joint products are made from a common process a number of decision troub

Determine current budgets, Explain Current budgets Current budgets: the...

Explain Current budgets Current budgets: the period of current begets is generally of months and weeks. These budget relate to the current activities of the business. According

Jit purchasing-jit aims, JIT purchasing On the other hand is a purchasi...

JIT purchasing On the other hand is a purchasing system in which material purchased are contracted so as that the receipt and usage of materials to the maximum extent possible,

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd