Question: Average demand = 5 0 bags / day . Each bag cost $ 5 . 0 0 to buy from his distributor. Tom sells the
Average demand bagsday
Each bag cost $ to buy from his distributor.
Tom sells the bags for $ each.
Each time he places an order for snacks, his distributor charges him a $ flat shipment rate. Tom
figures that the time it takes for one of his workers to determine how many snack bags to order and
then put the bags on the shelves to be minutes per order. His junior workers earn $hour
including fringe costs such as taxes and vacation
The holding rate on property near McCombs is high at because space there is very expensive.
Toms shop is open daysweek daysyearTom also sells bags of wavy potato chips per day, which have the same price
and cost structure. He notices that his customers seem indifferent between the
regular and wavy potato chips. So he thinks that he could take care of both his
regular potato chip customers AND his wavy potato chip customers by stocking
only regular potato chips. This would raise demand for regular potato chips to
bags per day. If Tom does this, what would his new order quantity be
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