Hartley Incorporated buys plastic resin by the ton and then packages and distributes it in smaller amounts
Question:
a. How much resin should Hartley order each time?
b. What will be the average inventory and annual holding cost?
c. Suppose that instead of havng each replenishment order delivered all in one shipment, Hartley asks its resin supplier to deliver each order in equally sized shipmets, one shipment per day, with each shipment big enough to cover two days' worth of demand. How will this affect Hartely's order quantity, average inventory, and annual holding costs? (Hints: Realize in this second scenario that Hartley's inventory level will never reach Q.)
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Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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