Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

Exercise 14

REORDER POINT
Refer to Exercise 20-10. Assume the economic lot size for small casings is 60,000 and that of the large casings is 20,000. Cushing Manufacturing sells an average of 2,400 small casings per workday and an average of 800 large casings per workday. It takes Cushing two days to set up the equipment for small or large casings. Once set up, it takes nine workdays to produce a batch of small casings and 10 days for large casings. There are 250 workdays available per year.
Required:
1. What is the reorder point for small casings? Large casings?
2. Using the economic order batch size, is it possible for Cushing to produce the amount that can be sold of each casing? Does scheduling have a role here? Explain. Is this a push or pull-through system approach to inventory management? Explain.