Volatile Industries originally estimated its annual demand for the TurboX259 as 800 units per year and its holding costs for the same item as $1.00 annually. Volatile has discovered at the end of the year that annual demand is only 600 units and holding costs per unit per year are closer to $2.00. The only good news is that Volatile figured orders cost $25.00 to place when they really cost just $20.00 each. Volatile now wants to know the significance of these mistakes on last year's decisions. Conduct sensitivity analysis to determine the percent change of the errors on last year's decision.

A) What was the combined effect of these errors on the economic order quantity for the TurboX250 product? Express your answer as a percentage.

B) What was the individual effect of each error on the economic order quantity for this product? Express your answer as a percentage.

C) What was the combined effect of these errors on the total relevant costs for last year? Express your answer as a percentage.

D) What was the individual effect of each error on the minimum total relevant cost for last year? Express your answer as a percentage.

Answer rating: 100% (QA)

To conduct sensitivity analysis for the economic order quantity EOQ and total relevant costs due to ... View the full answer