Question
In: Operations Management
Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French Bete...
Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French Bete Noire which is shipped directly from France. Weekly demand is for 45 cases. Millennium purchases each case for $125, there is a $275 fixed cost for each order (independent of the quantity ordered) and their annual holding cost is 25 percent.
a.What order quantity minimizes Millennium’s annual ordering and holding costs?
b.If Millennium chooses to order 350 cases each time, what is the sum of their annual ordering and holding costs? (Round your answer to 2 decimal places.)
c.If Millennium chooses to order 125 cases each time, what is the sum of the ordering and holding costs incurred by each case sold? per cases
d.If Millennium is restricted to order in multiples of 50 cases (e.g., 50, 100, 150, etc.) how many cases should they order to minimize their annual ordering and holding costs? cases
e.Millennium is offered a 5.00% discount if they purchase at least 1,000 cases. If they decide to take advantage of this discount, what is the sum of their annual ordering and holding costs?
Solutions
keosha answered 8 months agoRelated Solutions
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French...
Vino Veritas Company, a U.S.-based importer of wines and
spirits, placed an order with a French supplier for 1,800 cases of
wine at a price of 290 euros per case. The total purchase price is
522,000 euros. Relevant exchange rates for the euro are as
follows:
Date
Spot Rate
Forward Rate
to October 31
Call Option Premium
for October 31
(strike price $1.45)
September 15
$
1.45
$
1.51
$
0.045
September 30
1.50
1.54
0.080
October 31
1.55
1.55...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French...
Vino Veritas Company, a U.S.-based importer of wines and
spirits, placed an order with a French supplier for 1,700 cases of
wine at a price of 270 euros per case. The total purchase price is
459,000 euros. Relevant exchange rates for the euro are as
follows:
Date
Spot Rate
Forward Rate
to October 31
Call Option Premium
for October 31
(strike price $1.35)
September 15
$
1.35
$
1.41
$
0.050
September 30
1.40
1.44
0.085
October 31
1.45
1.45...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French...
Vino Veritas Company, a U.S.-based importer of wines and
spirits, placed an order with a French supplier for 1,700 cases of
wine at a price of 270 euros per case. The total purchase price is
459,000 euros. Relevant exchange rates for the euro are as
follows:
Date
Spot Rate
Forward Rate
to October 31
Call Option Premium
for October 31
(strike price $1.35)
September 15
$
1.35
$
1.41
$
0.050
September 30
1.40
1.44
0.085
October 31
1.45
1.45...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French...
Vino Veritas Company, a U.S.-based importer of wines and
spirits, placed an order with a French supplier for 1,900 cases of
wine at a price of 290 euros per case. The total purchase price is
551,000 euros. Relevant exchange rates for the euro are as
follows:
Date
Spot Rate
Forward Rate
to October 31
Call Option Premium
for October 31
(strike price $1.45)
September 15
$
1.45
$
1.51
$
0.060
September 30
1.50
1.54
0.095
October 31
1.55
1.55...
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The Parton Company has gathered the following information for a
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Direct Materials: $20
Direct Labor: $15
Overhead (60% variable): $20
Cost to Manufacture: $55
The above cost information is based on 10,000 units. Parton
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Required:
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Norris Co. has developed an improved version of its most popular
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Smith Industries purchases a subcomponent critical for its most
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than 200 units and $28 for each unit if Smith orders 200 units or
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Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk...
Laval produces lamps and home lighting fixtures. Its most
popular product is a brushed aluminum desk lamp. This lamp is made
from components shaped in the fabricating department and assembled
in the assembly department. Information related to the 25,000 desk
lamps produced annually follows. Direct materials $ 260,000 Direct
labor Fabricating department (5,500 DLH × $27 per DLH) $ 148,500
Assembly department (16,200 DLH × $22 per DLH) $ 356,400 Machine
hours Fabricating department 14,900 MH Assembly department 20,350
MH...
Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk...
Laval produces lamps and home lighting fixtures. Its most
popular product is a brushed aluminum desk lamp. This lamp is made
from components shaped in the fabricating department and assembled
in the assembly department. Information related to the 31,000 desk
lamps produced annually follows.
Direct materials
$
255,000
Direct labor
Fabricating department (6,000 DLH × $23 per DLH)
$
138,000
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$
338,800
Machine hours
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14,700
MH
Assembly department
20,400
MH...
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