Problem 1: Jackson Electronics inventories computer chips that cost $30.00 each. Inventory carrying cost is approximately 20% of value. It costs $40 to place, process, and receive an order. The firm uses 3,000 chips a year. What ordering quantity minimizes the sum of ordering and carrying cost?
Problem 2: Mathey, Inc. uses 4,000 cinder blocks a year. On average, the cinder blocks cost $14,and the annual cost of carrying one in inventory is $1.44. The cost of placing an order is$45. Use the economic order quantity model to determine annual, total inventory cost.
Problem 3: APPL, Inc. uses 10,000 litres of resin a year. On average, a litre of resin costs $43, and the annual cost of carrying one in inventory is $2.40. The cost of placing an order is $120. Use the economic order quantity model to determine annual, total inventory cost.
Problem 4: What is the approximate effective interest rate implied by not taking the discount when credit terms are 1/10, net 20?
Problem 5: Franklin Inc has a $20M revolving credit agreement with its bank at prime plus 3%. Prior to April, it had taken down $10M. On April 15, it took down another $5M. Prime is 9%, and the bankâ??s commitment fee is 0.25% annually. Calculate Franklin's April interest charges.