20-17 (continuation of 20-16). Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells...

  

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20-17 (continuation of 20-16). Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct "one-stop" purchasing using state-of-the-art Web site technology. FB's ordering cost per purchase order will be $30 using this new technology. 1. Calculate the E00 for the Galaxy jerseys using the revised ordering cost of $30 per purchase order. Assume all other data from Exercise 20-16 are the same. Comment on the result. 2. Suppose AT proposes to "assist" FB. AT will allow FB customers to order directly from the AT Web site. AT would ship directly to these customers. AT would pay S10 to FB for every Galaxy jersey purchased by one of FB's customers. Comment qualitatively on how this offer would affect inventory management at FB. What factors should FB consider in deciding whether to accept AT's proposal? 20-16 Economic order quantity for retailer. Fan Base (FB) operated a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions from its Los Angeles Galaxy soccer jerseys product line. This is a highly popular item. Data for 2013 are as follow: Expected annual demand for Galaxy jerseys Ordering cost per purchase order Carrying cost per year 10,000 $200 $7 per jersey Each jersey costs FB S40 and sells for 480. The $7 carrying cost per jersey year consists of the required return on investment of $4.80 (12% x $40 purchase price) plus $2.20 in relevant insurance, handling, and storage costs. The purchasing lead time is 7 days. FB is open 365 days a year. 1. Calculate the EOQ. 20-17 (continuation of 20-16). Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct "one-stop" purchasing using state-of-the-art Web site technology. FB's ordering cost per purchase order will be $30 using this new technology. 1. Calculate the E00 for the Galaxy jerseys using the revised ordering cost of $30 per purchase order. Assume all other data from Exercise 20-16 are the same. Comment on the result. 2. Suppose AT proposes to "assist" FB. AT will allow FB customers to order directly from the AT Web site. AT would ship directly to these customers. AT would pay S10 to FB for every Galaxy jersey purchased by one of FB's customers. Comment qualitatively on how this offer would affect inventory management at FB. What factors should FB consider in deciding whether to accept AT's proposal? 20-16 Economic order quantity for retailer. Fan Base (FB) operated a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions from its Los Angeles Galaxy soccer jerseys product line. This is a highly popular item. Data for 2013 are as follow: Expected annual demand for Galaxy jerseys Ordering cost per purchase order Carrying cost per year 10,000 $200 $7 per jersey Each jersey costs FB S40 and sells for 480. The $7 carrying cost per jersey year consists of the required return on investment of $4.80 (12% x $40 purchase price) plus $2.20 in relevant insurance, handling, and storage costs. The purchasing lead time is 7 days. FB is open 365 days a year. 1. Calculate the EOQ.

Answer rating: 100% (QA)

Solution Part a Economic order quantity 2DPC Where D is the annu... View the full answer