The BNK biotech company purchases a special type of raw material for one of its products...

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The BNK biotech company purchases a special type of raw material for one of its products called NLK-15 from a global wholesaler every three months. Emergency shipments can be made between these three-month intervals to resupply when inventory falls short of demand. It takes two weeks to receive the emergency shipments. The customers of BNK are willing to wait this long for a package of NLK-15. However, they will go to another seller if they must wait for the next three- month shipment. Historical data for the customer demand over a three-month interval for the last 10 years is shown below. 63 56 62 58 68 64 61 53 59 53 54 67 47 61 53 69 59 65 63 54 62 59 59 63 68 58 58 53 68 55 61 49 54 69 73 65 66 60 67 61 The cost of holding one pack of NLK-15 for one year is $500. The cost of emergency shipment is $250 per package over and above normal shipping costs. For each of the following questions fully interpret your final results and recommendations for the company. a) How many NLK-15 packages should the company be purchasing every three months? b) Repeat part (a) if excess demands are back ordered form one period to the next. In this case, the loss-of-goodwill cost is $100 for customers that have to wait until the next three- month period. Also, the bookkeeping expenses for is $50 per customer. c) Assume that if the company is out of stock of NLK-15, the customers will purchase the product from another biotech company. In this case, assume that each NLK-15 package costs an average of $10,000 and sell for an average of $13,500. How many NLK-15 packages should the company be purchasing every three months? Ignore loss-of-goodwill costs. The BNK biotech company purchases a special type of raw material for one of its products called NLK-15 from a global wholesaler every three months. Emergency shipments can be made between these three-month intervals to resupply when inventory falls short of demand. It takes two weeks to receive the emergency shipments. The customers of BNK are willing to wait this long for a package of NLK-15. However, they will go to another seller if they must wait for the next three- month shipment. Historical data for the customer demand over a three-month interval for the last 10 years is shown below. 63 56 62 58 68 64 61 53 59 53 54 67 47 61 53 69 59 65 63 54 62 59 59 63 68 58 58 53 68 55 61 49 54 69 73 65 66 60 67 61 The cost of holding one pack of NLK-15 for one year is $500. The cost of emergency shipment is $250 per package over and above normal shipping costs. For each of the following questions fully interpret your final results and recommendations for the company. a) How many NLK-15 packages should the company be purchasing every three months? b) Repeat part (a) if excess demands are back ordered form one period to the next. In this case, the loss-of-goodwill cost is $100 for customers that have to wait until the next three- month period. Also, the bookkeeping expenses for is $50 per customer. c) Assume that if the company is out of stock of NLK-15, the customers will purchase the product from another biotech company. In this case, assume that each NLK-15 package costs an average of $10,000 and sell for an average of $13,500. How many NLK-15 packages should the company be purchasing every three months? Ignore loss-of-goodwill costs.

Answer rating: 100% (QA)

a The company should purchase 62 NLK15 packages every three months to minimize inventory costs To determine the optimal order quantity we can use the ... View the full answer