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(Answered) Working Capital Management


Part a) 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?;Part b) 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.;Part c) 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.;Part d) What is the approximate effective interest rate implied by not taking the discount when credit terms are 1/10, net 20?;Part e) 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 bank???s commitment fee is 0.25% annually. Calculate Franklin's April interest charges.
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Working Capital Management

 


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