Becky Shelton, a marketing coordinator for Douglass Enterprises, is in charge of ordering the T-shirts to be sold for the companys annual fund-raising project. The T-shirts are printed with a special Douglass Enterprises logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the company $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 890 shirts.

Required

If the company receives actual sales orders for 830 shirts, what amount of profit will the company earn? What is the cost of waste due to excess inventory?

If the company receives actual sales orders for 930 shirts, what amount of profit will the company earn? What amount of opportunity cost will the company incur?

Answer rating: 100% (QA)

To calculate the profit and cost of waste due to excess inventory as well as the profit and opportun... View the full answer