The M13 Bill of Material is given here. The table below shows your current inven
ID: 359024 • Letter: T
Question
The M13 Bill of Material is given here. The table below shows your current inventory levels of each item.
How many additional units of SPM are needed to make 71 M13s?
Your Answer:Question 56 options:
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Question 57 (6 points)
The most important inventory item has annual holding costs of $378.00. One method of shipping this item is 3 days faster than the other, but it is $1.21 more per unit.
How much more expensive is the slower method compared to the faster method? (Include the pennies in your answer)
Your Answer:Question 57 options:
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Question 58 (6 points)
Determine the 2 day incremental holding costs for shipping 60 boxes of parts when each box has a price of $215 and holding costs are 31% of the total shipment value. The shipping costs are $370 for 1 day and $290 for 3 days.
Your Answer:Question 58 options:
Item Quantity Axle 5 SPM 136 SPR 9 T889 8Explanation / Answer
Answer to question 56 :
4 units of SPR is required to produce 1 unit of M3
And
8 units of SPM are required to produce 1 unit of SPR
Therefore , 4x 8 = 32 units of SPM are required to produce 1 unit of M13
Also , independently 1 unit of SPM is required to produce 1 unit of M13
Therefore , number of SPMs required to produce 1 unit of M13 = 1 + 32 = 33 units
Hence, number of SPMs required to produce 71 M13 = 33 X 71 = 2343 units
Current inventory level of SPM = 136
Additional units of SPM needed to make 71 M13s = 2343 – 136 = 2207
ADDITIONAL UNITS OF SPM NEEDED TO MAKE 71 M13s = 2207
Answer to question 57:
Holding cost for 365 days = $378
Therefore incremental holding cost for 3 days = $ 3/365 x 378 = $3.10
Incremental holding cost for slow moving item = $3.10
However saving in shipping cost of slow moving item = $1.21
Therefore , slower method is more expensive than faster method by = $3.10 - $1.21 = $1.89
Answer to question 58 :
Total price of 60 boxes (i.e. annual shipment value )= $215 x 60 = $12900
Total annual holding cost @31% of total shipment value = 0.31 x $12900 = $ 3999
Total holding cost for 365 days = $3999
Therefore ,
Holding cost for incremental 2 days ( 3 days vs 1 day ) = 2/365 x $3999 = $21.91
ADDITIONAL UNITS OF SPM NEEDED TO MAKE 71 M13s = 2207
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