A company estimates it will sell 5000 products in a year. It would like to make...

A company estimates it will sell 5000 products in a year. It would like to make some number N of qually spaces orders of size x units per order so that the total inventory cost (which includes ordering and storage) is minimized.

a. If there is a $20 per order fixed cost plus a cost of $9 per unit ordered, and the storage cost per unit per year is $10, find the number of orders and the number of units per order that the goal of minimizing inverntory costs is achived.

b. Suppose that the ordering cost doubles to $18 per unit ordered, and that no other change is made. Decide whether this should or should not change the solution that you found in part a. , and justify your answer.

Solutions

Expert Solution

comment if you need further clarification!

milcah answered 1 year ago

Next > < Previous

Related Solutions

1. Give an example of a product you would like to make and sell (like coffee...

1. Give an example of a product you would like to make and sell (like coffee - just pretend). a.What are some of the variable costs, fixed costs, mixed costs? b. What are some of the product costs versus period costs? c. What are the direct materials, direct labor, manufacturing overhead costs? Write this out as if you were giving it to a potential business partner

As manager of the Best Drinks Company in Hayward, you would like to sell drinks at...

As manager of the Best Drinks Company in Hayward, you would like to sell drinks at a booth during the major celebration in the Hayward’s Central Park. The following table provides information about the drinks that you will be selling: You estimate labor cost to be $600 (2 people, $300 dollars each per day at the booth). Even if nothing is sold, your labor cost will be still $600, so you decide to consider this a fixed cost. Booth rental,...

The company PR Products Corp. estimates that its quarterly sales for the next year are as...

The company PR Products Corp. estimates that its quarterly sales for the next year are as follows: (units) The price per unit is $ 70 1. 1 Quarter 30,000 units 2. 2 Quarter 50,000 3. 3 Quarter 60,000 4. 4 Quarter 40,000 Accounts receivable as of December 31 are $ 90,000. The company estimates that sales are charged 60% in the quarter they are made and 40% in the following quarter. Finished Goods' desired ending inventory represents 20% of next...

A manager of the company would like to determine average delivery time of the products. A...

A manager of the company would like to determine average delivery time of the products. A sample of 25 customers is taken. The average delivery time in the sample was four days with a standard deviation of 1.2 days. Suppose the delivery times are normally distributed. Provide a 95 % confidence interval for the mean delivery time. The manager claims that the average delivery time of their products does not exceed 3 days. Write the null and alternative hypothesis regarding...

A company enters into a short futures contract to sell 5000 bushels of wheat for 450...

A company enters into a short futures contract to sell 5000 bushels of wheat for 450 cents per bushel. The initial margin is $ 3000 and the maintenance margin is $2000. What price change would lead to a margin call? Under what circumstances could 1,500 be with drawn from the margin account? Please provide formulas thank you

How many units would I need to sell to make a 30% profit for year 2...

How many units would I need to sell to make a 30% profit for year 2 and a 40% profit for year three Year 1 year 2 year 3 Sales Units 2500 2750 2900 sales Price Unit $150.00 $150.00 $150.00 REVENUE $375,000 $412,500 $435,000 Variable Costs: Direct Materials $20.00 $20.50 $26.01 Direct Labor $17.15 $17.60 $19.22 Variable OH $2.50 $2.53 $2.55 Fixed Costs: Rent 80,000 $80,000 $80,000 Supervision 200,000 $205,000 $210,250 Mixed Costs: Utilites-Fixed 20,000 20,000 20,000 Utilities-Variable $2.50 $2.50...

McGilla Golf has decided to sell a new line of golf clubs. The company would like...

McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. The clubs will sell for $840 per set and have a variable cost of $400 per set. The company has spent $290,000 for a marketing study that determined the company will sell 69,100 sets per year for seven years. The marketing study...

McGilla Golf has decided to sell a new line of golf clubs. The company would like...

McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. The clubs will sell for $775 per set and have a variable cost of $335 per set. The company has spent $160,000 for a marketing study that determined the company will sell 61,000 sets per year for seven years. The marketing study...

McGilla Golf has decided to sell a new line of golf clubs. The company would like...

McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. The clubs will sell for $865 per set and have a variable cost of $425 per set. The company has spent $340,000 for a marketing study that determined the company will sell 70,600 sets per year for seven years. The marketing study...

McGilla Golf has decided to sell a new line of golf clubs. The company would like...

McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. The clubs will sell for $800 per set and have a variable cost of $360 per set. The company has spent $210,000 for a marketing study that determined the company will sell 66,000 sets per year for seven years. The marketing study...

Subjects