Dominic’s supermarket chain sells Nut Flakes, a popular cereal manufactured by the Tastee cereal company. Demand for Nut Flakes is 1,000 boxes per week. Dominick’s has a holding cost of 25 percent and incurs a fixed trucking cost of $200 for each replenishment order it places with Tastee.

(a) Given that Tastee normally charges $2 per box of Nut Flakes, how much should Dominick’s order in each replenishment lot?

(b) Tastee runs a trade promotion, lowering the price of Nut Flakes to $1.80 for a month. How much should Dominick’s order be, given the short-term price reduction?

Answer rating: 100% (QA)

2DC HC HC 25 2 100 025 X2 05 ... View the full answer