Please help me determine order size and when to reorder.

This years target profit goal for each DigiLife store has been set at $1,000,000 . We expect you to exceed this goal, and we will offer whatever support we can to help you get there.

Good morning, store managers,

Based on last years numbers and expected trends into this year, our analysts have concluded the following about the Amulet:

Cost of product: $95/unit

The sales price of the Amulet is $200/unit.

Supplier has confirmed that this will be the average per-unit cost when we place orders in 50-unit increments (Each box has 50 units).

Costs of ordering and delivery: $6,000 per order

We have reached an agreement with the shipping service. All purchases will be billed at a flat rate of $6,000 for each order placed in the normal order cycle, which requires a 5 days lead time.

Rush orders will be charged $40 extra per unit. They will arrive the next day.

The Accounting Department estimates the cost of holding inventory to be $1.35 per unit per day. This amount includes warehouse rental costs and insurance.

To help you succeed this quarter and every other quarter, we want to point out what we think are the top threats to your profits:

1. Stockouts. If a customer enters your store looking for the Amulet and you are out of stock, you can expect to lose that sale. Expect the customer to drive to another store or order online. The days of backorders are long gone. 2. Excess stock. This is very costly, particularly for your electronics that need to be in a climate-controlled warehouse. The cost of storage will eat into your profits considerably.

THIS MONTH THIS QUARTER YEAR-TO-DATE Revenue Costs 125 100 75 Cost/Revenue ($) Costs and Revenues will appear here as the simulation runs 50 25 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Inventory Units left: 0 Demand: 0 Please make a decision to begin. 40 30 Units 20 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Total Units Sold Total Revenue Total Costs 0 $0 $0 You can place a maximum order of 4,000 units in multiples of 50. The larger your order, the higher your holding costs. However, smaller orders mean more frequent re-ordering costs. -Order Size 50 Units Cost Per Unit: $95 Purchase Cost: $4,750 Shipping Fee: Normal shipping(5 days) - $6,000 Total Cost: $10,750 PLACE ORDER & START SIMULATION CLOSE THIS MONTH THIS QUARTER YEAR-TO-DATE Revenue Costs 125 100 75 Cost/Revenue ($) Costs and Revenues will appear here as the simulation runs 50 25 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Inventory Units left: 0 Demand: 0 Please make a decision to begin. 40 30 Units 20 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Total Units Sold Total Revenue Total Costs 0 $0 $0 You can place a maximum order of 4,000 units in multiples of 50. The larger your order, the higher your holding costs. However, smaller orders mean more frequent re-ordering costs. -Order Size 50 Units Cost Per Unit: $95 Purchase Cost: $4,750 Shipping Fee: Normal shipping(5 days) - $6,000 Total Cost: $10,750 PLACE ORDER & START SIMULATION CLOSE