ACME Company is a big supplier that wants to make it difficult for new suppliers to take sales away from its importantcustomer BAKER. Currently ACME sells BAKER 10,000 units yearly at a cost of $75.75 per unit. And BAKER is placing ordersof EOQ. ACME wants BAKER to increase the size of its next order to 3500 units by offering a price discount. Ordering costsare $320 per order and holding cost is 20% of item value. What is the smallest discount (new discount price), that ACMEneeds to offer BAKER to make it economical to purchase 3500 units next time?O 68.13O 66.65O 70.3574.05O 71.830 0 0

Given data: Demand (D) =10,000/year Price =$ 75.75 /unit Ordering cost (S) = $320 per order…

Answered: ACME Company is a big supplier that…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Hammonds Corporation is trying to decide between two alternate order plans for itsinventory of a certain item. Irrespective of the plan to be followed, demand for the item isexpected to be 1,000 units annually. Under Plan A: order costs would be $ 40 per orderand inventory holding costs (carrying cost) would be $100 per unit per annum. Under PlanB order costs would be $30 per order, while holding costs would be 20% of unit cost whichis $480.Determine:i. the economic order quantity for EACH plan ii. total inventory cost for EACH plan iii. hence, indicate which plan would be better for the company
A company will begin stocking remote control devices. Expected monthly demand is 800 units. Thecontrollers can be purchased from either supplier A or supplier B. Their price lists are as follows:SUPPLIER A SUPPLIER BQuantity Unit Price Quantity Unit Price1–199 $14.00 1–149 $14.10200–499 13.80 150–349 13.90500 + 13.60 350 + 13.70 Ordering cost is $40 and annual holding cost is 25 percent of unit price per unit. Whichsupplier should be used and what order quantity is optimal if the intent is to minimize totalannual costs?
A supplier for St. LeRoy Hospital has introduced quantity discounts to encourage larger order quantities of aspecial catheter. The price schedule isOrder Quantity Price per Unit0 to 299 $60.00300 to 499 $58.80500 or more $57.00The hospital estimates that its annual demand for this item is 936 units, its ordering cost is $45.00 per order,and its annual holding cost is 25 percent of the catheter’s unit price. What quantity of this catheter should thehospital order to minimize total costs? Suppose the price for quantities between 300 and 499 is reduced to$58.00. Should the order quantity change?
Angie needed a new refrigerator after her old one stopped working and couldn’t be repaired. At the appliance store, she ended getting a new refrigerator plus a new stove and dishwasher because the sales associate showed her that by buying all three, should could save money that she could save not buying any of the items separately. The store used what kind of adjustment to the base price? . Quantity discounting b. Rebates c. Bundling d. Financing
Please do not give solution in image formate thanku. Firm C’s demand for a product is 60 units per month. Its supplier charges an ordering cost of $40 per order and $35 per unit with a 20% discount for orders of 100 units or more. Firm C incurs a 20% annual holding cost. What is the optimal order quantity that minimizes the total purchasing, ordering, and holding cost? A. 91 B. 100 C. 101 D. 110
Hayes Electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters: (a) Both ordering cost and carrying cost are 10% less than originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.
Explain why it is not necessary to include product cost {priceor price times qua ntity) in the EOQ model, but the quantitydiscount model requires this information.
Miguel has a product with an annual holding cost percentage of 20%, an ordering cost of $110 per order, and annual demand of 15,000 units. The following price schedule applies to the product from a supplier. What is the optimal order quantity? Show all work including a graph. Units Price 1-250 $30.00 251-500 $28.00 501-750 $26.00 ≥ 751 $25.00
The following information relates to the forthcoming period:-Order costs = $25per orderHolding costs = 17% of purchase priceAnnual demand = 16,000 unitsPurchase price = $17 per unitOrder quantity = 650 unitsRequired:-What are the total annual costs of inventory?
The manager of a large electronics store wants to begin stocking a universal TV remote control device. Expected daily demand is 25 units (250 working days a year). The remote controls can be purchased from either supplier A or supplier B. Their price lists are as follows: Supplier A Supplier B Quantity Unit price Quantity Unit price 1-199 $14 1-149 $14.1 200-499 $13.8 150-349 $13.9 500+ $13.6 350+ $13.7 Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Lead time for either supplier is 10 days. Which supplier should be chosen and what kind of inventory ordering policy should be adopted?
Assume that JAO, Inc., a manufacturer of electronic test equipment, uses 14,400 units of an item annually. Its order cost is P500 per order, and the carrying cost is P10 per unit per year. It requires 10 days to place and receive an order. 1. The ordering costs is 5,696 4,026 6,000 4,8002. The inventory costs is 6,000 12,000 9,600 8,052
The Rahway, New Jersey, plant of Metalcase, a manufacturer of office furniture, produces metaldesks at a rate of 200 per month. Each desk requires 40 Phillips head metal screws purchasedfrom a supplier in North Carolina. The screws cost 3 cents each. Fixed delivery charges and costsof receiving and storing shipments of the screws amount to about $100 per shipment, independently of the size of the shipment. The firm uses a 25 percent interest rate to determineholding costs. Metalcase would like to establish a standing order with the supplier and is considering several alternatives. What standing order size should they use?

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