Upon hearing that Ross White (see Problems 6-25 and 6-26) is considering producing the brackets in house,
Question:
Upon hearing that Ross White (see Problems 6-25 and 6-26) is considering producing the brackets in house, the vendor has notified Ross that the purchase price would drop from $15 per bracket to $14.50 per bracket if Ross will purchase the brackets in lots of 1,000. Lead times, however would increase to 3 days for this larger quantity.
(a) What is the total annual inventory cost plus purchase cost if Ross buys the brackets in lots of 1,000 at $14.50 each?
(b) If Ross does buy in lots of 1,000 brackets, what is the new ROP?
(c) Given the options of purchasing the brackets at $15 each, producing them in-house at $14.80, and taking advantage of the discount, what is your recommendation to Ross White?
Step by Step Answer:
0015 a Total cost ordering cost holding cost purchase ...View the full answer
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna
