The operations manager at a chemical company that produces insecticide for use in commercial applications is attempting to set a safety stock level for a key ingredient that is used in their most powerful product. She believes that demand during lead time for this ingredient is normally distributed based on past data. In addition, she believes that future use is accurately depicted by these historical demand-duringlead-time data (in gallons): 55, 75, 75, 70, 80, 60, 50, 70, 60, and 85. She estimates the standard deviation of demand during the lead time to be 8.5 gallons. a. What is the average demand during the lead time for this key ingredient?
b. What is the safety stock they need to provide a 95% service level?
c. What is the order point the company should use?
Answers
Answer:
a) Average demand during the lead time = Sum of all the historical demand during lead time / Number of periods
= (55+75+75+70+80+60+50+70+60+85) / 10
= 680 / 10
= 68 gallons
b) Standard deviation of demand during lead time(\sigmadL) = 8.5 gallons
At 95% service level,value of Z = 1.65
Safety stock = Z(\sigmadL) = 1.65(8.5) = 14.03 gallons
c) Reorder point = Average demand during the lead time + Safety stock
= 68 + 14.03
= 82.03 gallons
Related Questions
Austin, Texas is host to a popular festival, South by Southwest (SXSW) which recently celebrated its 30th anniversary. It has released dates for the new year and invites participants for the unique music, film, and interactive events or sessions from March 10th through 19th. Which category of nontraditional marketing would best characterize the marketing activities to attract attendees for the multi-day festival? (A) event (B) cause (C) place (D) organization
About how frequently does Hope receive a paycheck?
Comparative advantage is based on the economic concept of:A. marginal cost.B. opportunity cost.C. nonsatietyD. rationality.
If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but it does not represent a real financial cost to your firm as long as the customer periodically pays off its entire balance. A. True B. False .
Answers
Answer:
Loss on bond redemption = $3 million
Explanation:
Given:
Face value = $15 million
Carrying value = $13 million
Cash paid = $16 million
Find:
Profit / loss
Computation:
Loss on bond redemption = Carrying value - Cash paid
Loss on bond redemption = $13 million - $16 million
Loss on bond redemption = $3 million
The entry to record the retirement will include option E. A loss of $3 million. To understand the calculation see below.
Bond Redemption
We are provided with the information about :
Face value = $15 million
Carrying value = $13 million
Cash paid = $16 million
We need to find profit or loss. The difference between Carrying value and Cash paid is the profit or loss.
Carrying Value - Cash paid
$13 million - $16 million
-$3 million, the answer is negative hence there is loss.
Therefore, the correct option is E. A loss of $3 million.
Learn more about Redemption here:
Answers
Answer:
$494,918
Explanation:
For computation of net present value we need to follow some steps which is shown below:-
After tax cost of debt = Pretax cost of debt × (1 - tax rate)
=5.58% × (1 - 0.4)
= 3.348%
debt ÷ equity
= Debt - equity ratio
Hence debt = 0.59 equity
Assume the equity be $x
Debt = $0.59x
Total = $1.59x
WACC = Respective costs × Respective weights
= (x ÷ 1.59x × 11.25%) + (0.59x ÷ 1.59x × 3.348)
= 8.318%
Present value of annuity = Annuity × (1 - (1 + interest rate)^ - time period] ÷ Rate
=1.63 × [1 - (1.08317811321)^-7]÷ 0.08317811321
= $1.63 × 5.150256501
=$8,394,918.10
Net present value = Present value of cash inflows - Present value of cash outflows
= $8,394,918.10 - $7,900,000
= $494,918
Answers
Answer:
The demand curve for wine shifts to the right
Explanation:
As per the forecast, there should be a decline in grape harvest. This induces the buyers to purchase more quantity of grapes in an anticipation of decline in future harvest which would eventually make grapes costlier than now.
Production of wine depends upon the availability of inputs. Grape being one of the necessary inputs. This means if in future, price of grapes rise, the production of wine would be costlier, which would raise the price of wine.
As a consequence of such an announcement, the wine market would experience an immediate increase in demand for wine which would shift the demand curve to the right.
Answers
Answer:
c. Internal Service Fund
Explanation:
Internal Service Fund -
It refers to the sum of amount required to track the motion of any goods and services from one department to another , is referred to as internal service fund .
The amount spend on the internal service fund is used to determine the complete cost of providing the services and goods .
For example , maintenance is an example of the internal service fund .
Hence , from the given information of the question ,
The correct answer is c. Internal Service Fund .
Answers
Answer:
The answer is $41.2
Explanation:
This will be solved by Dividend Discount Model which is one of the ways of valuing the price of shareholders' equity.
Here, the future value of dividend payment are discounted using the cost of equity.
Ke = D1/Po + g
Where Ke is the cost of equity
D1 is future dividend payment.
Po is the current share price or stock price
g is the growth rate.
To find the current price of stock price, we need to re write the equation;
Po = D1 ÷ (Ke - g)
D1 = Do x 1.03
= $2 x 1.03
=2.06
Ke = 8% or 0.08
g = 3% or 0.03
So we have;
2.06 ÷ (0.08 -0.03)
$2.06 ÷ 0.05
$41.2
Answers
The tax that needs to be reduced is $ 4.66 billion
Further Explanation
The amount (Deflationary / recessionary) gap =
Keynesian Spending Multiplier from government spending
k =
Tax Multiplier from tax
t =
Option 1: Increased government spending (Loosening / Expansionary Fiscal Policy) by
GovSpending (Gs) =
Option 2: Tax is reduced by (-)
Tax = =
In economics, deflation is a period in which prices generally fall and the value of money increases. Deflation is the opposite of inflation. If inflation occurs due to a large amount of money circulating in the community, deflation occurs due to a lack of money in circulation. One way to overcome deflation is to reduce interest rates.
In the macroeconomy, a recession is a condition when the gross domestic product (GDP) decreases or when real economic growth is negative for two quarters or more in one year. Recession can result in a simultaneous decline in all economic activities such as employment, investment, and corporate profits. Recession is often associated with falling prices (deflation), or, conversely, sharply rising prices (inflation) in a process known as stagflation. The economic recession that lasts long is called economic depression. The drastic decline in the level of the economy (usually due to severe depression, or due to hyperinflation) is called economic bankruptcy (economic collapse). Columnist Sidney J. Harris distinguishes the above terms in this way: "A recession is when a neighbor loses a job; depression is when you lose a job."
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Deflationary brainly.com/question/13135934
To Reduce Tax brainly.com/question/13135934
Details
Class: College
Subject: Business
Keywords: Deflationary, tax, recessionary
Final answer:
To close the remainder of the recessionary gap, taxes need to be reduced by approximately $11.67 billion.
Explanation:
To close the remainder of the recessionary gap of $10 billion, the government has approved a spending increase of $3 billion. The question asks how much taxes need to be reduced to make up the difference. We can use the concept of the Marginal Propensity to Consume (MPC) to find the answer.
The MPC represents the proportion of additional income that individuals spend. In this case, the MPC is given as 0.6. Therefore, for every additional dollar of income, individuals will spend $0.6.
To determine how much taxes need to be reduced, we can use the formula:
Tax Reduction = (Remainder of Recessionary Gap)/MPC
Substituting the values, Tax Reduction = $7 billion/0.6 = $11.67 billion. Therefore, taxes need to be reduced by approximately $11.67 billion to close the remainder of the recessionary gap.
Learn more about Fiscal Policy here:
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