An inventory turnover analysis is useful to the auditor becauseit may detect.
a. Inadequacies in inventory pricing.
b. Methods of avoiding cyclical holding costs.
c. The optimum automatic reorder points.
d. The existence of obsolete merchandise.
An inventory turnover analysis is useful to the auditor becauseit may detect.
a. Inadequacies in inventory pricing.
b. Methods of avoiding cyclical holding costs.
c. The optimum automatic reorder points.
d. The existence of obsolete merchandise.
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Related questions
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.
| Item cost | $ | 8.00 | Standard deviation of weekly demand | 20 | per week | |
| Order cost | $ | 223.00 | Lead time | 4 | weeks | |
| Annual holding cost (%) | 28 | % of item cost | Service probability | 99 | % | |
| Annual demand | 27,400 | |||||
| Average demand | 548 | per week | ||||
a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given ?-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
| Optimal order quantity 2366 | units | |
| Reorder point | units | |
b. Determine the annual holding and order costs. (Round your answers to 2 decimal places.)
| Holding cost | $2616.32 | |
| Ordering cost | $2615.67 | |
c. Assume a price break of $55 per order was offered for purchase quantities of 2,200 or more units per order. If you took advantage of this price break, how much would you save annually? (Round your answer to 2 decimal places.)
| Annual savings | $ |
Problem 20-15
| Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. |
| Item cost | $ | 9.00 | Standard deviation of weekly demand | 20 | per week | |
| Order cost | $ | 202.00 | Lead time | 1 | week | |
| Annual holding cost (%) | 28 | % of item cost | Service probability | 90 | % | |
| Annual demand | 24,000 | |||||
| Average demand | 480 | per week | ||||
| a. | Determine the order quantity and reorder point. (Use Excelâs NORMSINV( ) function to find your z-value and then round that z-value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.) |
| Optimal order quantity | units |
| Reorder point | units |
| b. | Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.) |
| Holding cost | $ |
| Ordering cost | $ |
| c. | Assume a price break of $50 per order was offered for purchase quantities of 2,000 units per order. If you took advantage of this price break, how much would you save annually? (Do not round any intermediate calculations (including number of setups per year). Round your final answer to 2 decimal places.) |
| Annual savings | $ |
