Question: Johnson Electronics sells electrical and electronic components through catalogs. Catalogs are updated and printed every year. The variable production cost is $5 per catalog. Data

 Johnson Electronics sells electrical and electronic components through catalogs. Catalogs areupdated and printed every year. The variable production cost is $5 per

Johnson Electronics sells electrical and electronic components through catalogs. Catalogs are updated and printed every year. The variable production cost is $5 per catalog. Data indicate that, on average, each printed catalog generates a profit of $25 from sales (i.e., $30 revenue). What is the optimal service level for the catalogs printing decision? Please identify Cu (under-stocking cost) and Co (over-stocking cost) to calculate the critical ratio, i.e., the optimal service level. Please briefly explain your calculation logic to show the work. Edit View Insert Format Tools Table 12pt Paragraph Cu=$25$5=$20Co=$5 Critical ratio =Cu/(Cu+Co)=20/(20+5)=0.8 Cont. from the previous question The demand for the printed catalog is distributed as follows (a selective part): Please identify the optimal production quantity, i.e., the number of catalogs to be printed, based on the optimal service level identified in the previous question. Please explain your logic to show the work

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!