# Upon hearing that Ross White (see Problems 6-25 and 6-26)

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?

Related Book For

Quantitative Analysis for Management

11th Edition

Authors: Barry render, Ralph m. stair, Michael e. Hanna

ISBN: 978-0132149112

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