Question: 2 . ( Inventory Management - Part 1 ) A manager just received a new price list from supplier. It will now cost (

2.(Inventory Management - Part 1) A manager just received a new price list from supplier. It will now cost \(\$ 1.00\) a box for order quantities of 801 or more boxes, \(\$ 1.1\) a box for 200 to 800 boxes, and \(\$ 1.20\) for smaller quantities. Ordering cost is \(\$ 80\) per order and carrying costs are \(\$ 10\) per box a year. The firm uses 3,600 boxes a year. The manager suggested a "round number" order size of 800 boxes. The manager's rationale is that with a U-shaped cost curve that is flat at its minimum, the difference in total annual cost between 800 and 801 units would be small anyway. How would you reply to the manager's suggestion? What order size would you suggest?
2 . ( Inventory Management - Part 1 ) A manager

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!