Winning Textiles (WT) manufactures the Galaxy jackets that Super Shirts sells. WT has recently installed computer software that enables its customers to conduct “one- stop” purchasing using state- of- the- art Web site technology. SS’s ordering cost per purchase order will be $ 40 using this new technology.

Required

1. Calculate the EOQ for the Galaxy jackets using the revised ordering cost of $ 40 per purchase order. Assume all other data from Exercise 10- 16 are the same. Comment on the result.

2. Suppose WT proposes to “assist” SS. WT will allow SS customers to order directly from the WT Web site. WT would ship directly to these customers. WT would pay $ 15 to SS for every Galaxy jersey purchased by one of SS’s customers. Comment qualitatively on how this offer would affect inventory management at SS. What factors should SS consider in deciding whether to accept WT’s proposal?