Question: Indus machine shop has customers requesting Special Flat screws throughout the year. The owner, Mathews, buys these screws from MSC at a price of $8

Indus machine shop has customers requesting

Indus machine shop has customers requesting Special Flat screws throughout the year. The owner, Mathews, buys these screws from MSC at a price of $8 per pair. In an effort to improve profitability by selling in greater quantities, the sales rep. for MSC has made the following offer to Indus Machine Shop: If Mathews orders from 1 to 50 pairs at a time, the cost per pair is $8.00. If the order is between 51 to 100 pairs at a time, the per pair is $7.85. On orders for more than 100 pairs at a time, the cost per pair is $7.75. The owner estimates annual demand to be 300 pairs of special screws. Holding costs are 25 percent of unit price. The cost to place an order is $5. cost a) Determine the most cost-effective ordering policy (EOQ) for Indus Machine Shop b) Total Set-up and Holding Cost? c) Total Cost? d) Which discount offer from MSC sales rep. will help make right business decision

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!