Question: 5. A company is using the re-order point model to manage the inventory of a certain kind of product. Currently, the inventory system uses an

5. A company is using the re-order point model to

5. A company is using the re-order point model to manage the inventory of a certain kind of product. Currently, the inventory system uses an economic order quantity of 600 units. Consider the following situations: (a) Suppose the company is able to get much cheaper transportation such that the setup cost is reduced from $90 per order to $10 per order. Everything else remains unchanged. Do you have sufficient information to determine the new economic order quantity? If not, explain why; if yes, what is it? (5 points) (b) Suppose the company is able to negotiate a lower wholesale price from its supplier, from $14.4 per unit to $10 per unit. Everything else remains unchanged. Do you have sufficient information to determine the new economic order quantity? If not, explain why; if yes, what is it? (5 points) (c) Suppose the optimal order quantity obtained from the basic EOQ formula is 600 units per order. In addition, the total inventory holding cost for one whole year is $600. Do you have sufficient information to determine the company's inventory holding cost per unit per year for this product? If not, explain why; if yes, what is it? (5 points)

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 General Management Questions!

The Pacific Fruit Company has designed its packaging process for boxes to hold a net weight (nominal value) of 9.0 oz of raisins with tolerances of plus or minus 0.5 oz. Given a process mean of 9.00,...

1. A company has been selling a new product for 4 months and wants to forecast the demand for the 5 th month. The company is considering different forecasting methods. (a) The first forecasting...

5. A company is using the re-order point model to manage the inventory of a certain kind of product. Currently, the inventory system uses an economic order quantity of 600 units. Consider the...

1.Royal baker sells dog collars. One of its high-end products cost $250, of which RBI sells two per day. The company wants to explore using a reorder point system to manage its inventory. The cost to...

Royal Barker Inc. (RBI) sells boutique dog collars. One of its high-end products, the Pink Princess, is a pink collar with rhinestones that costs $250, of which RBI sells two per day. The company...

Boeing receives an order from American Airlines to make 10 jet engines, this order for Boeing considered. The following inventory model is typically for reordering products destined for special...

I need help with question one option 3 and 2 01: Ollah's Organic Pet Ship sells about 4000 bags of free-range dog biscuits every year. The fixed ordering cost is $15, and the cost of holding a bag in...

Ollah's Organic Pet Shop sells about 5 , 2 5 0 bags of free-range dog biscuits every year. The fixed ordering cost is $ 1 8 , and the cost of holding a bag in inventory for a year is $ 3 . 5 0 . a....

Ollahs Organic Pet Shop sells about 4,000 bags of free- range dog biscuits every year. The fixed ordering cost is $15, and the cost of holding a bag in inventory for a year is $2. a. (*) What is the...

Need some help please. If you can please assist me 1. Find the profitability index (PI) for the following series of future cash flows, assuming the company's cost of capital is 12.73 percent. The...

Q1: Ollah's Organic Pet Ship sells about 4000 bags of free-range dog biscuits every year. The fixed ordering cost is $15, and the cost of holding a bag in inventory for a year is $2. 1. What is the...

3 Use Matlab to plot s+7s +10 A system is described by a transfer function G(s) = the step response. Then perform a partial fractions expansion (using Matlab if you wish) and show that the previous...

Rules of Probability Question 9500 students are enrolled in a community college. Of 9500, 3350 have a Visa, 2200 have a MasterCard, and 860 have both credit cards. Find the probability that a student...

the running total of all profits and losses of a company. is called treasury stock must be paid out as dividends every 1 0 years

Case Greenbuilders Pte Lid ("GPL") is a local construction company which specialises in providing bespoke Design and Build construction services for private residential homes that are designed to be...