Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Buckley’s current inventory policy? ii) Is this the entity’s cost minimizing solution for this product each year? Explain
Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Buckley’s current inventory policy? ii) Is this the entity’s cost minimizing solution for this product each year? Explain
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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Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000
units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the
business $75 to place a single order. Currently the business places 12 orders each year.
i) What is the total stock administrative cost of Buckley’s current inventory policy?
ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
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