Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 49

Safety Stock; Reorder Point O
Party-Hearty Company makes a variety of holiday party packs. One party pack is for a bachelorette party. It includes a tiara, a pink feathered boa, and a t-shirt emblazoned with ''I'm the Bride.'' Pink feathered boas are purchased from an outside supplier. Each year, 8,000 boas are used, at the rate of 20 boas per day. However, some days as many as 65 boas are used. It takes 6 days from the time that Party-Hearty places an order of boas to the arrival of the order.
Required:
1. Calculate the reorder point without safety stock.
2. Calculate the amount of safety stock.
3. Calculate the reorder point with safety stock.
4. Conceptual Connection: As a manager for Party-Hearty, how could seasonality affect the usage of boas How could knowledge of the effect of seasonality affect the amount of safety stock carried