The annual demand for a particular chemical product is 1,200 units. Suppose that the annual holding cost is $24 per unit, and the ordering cost is $100. Part A: Find the optimal order quantity based on EOQ analysis, and calculate the combined annual ordering and holding cost. Part B: Now suppose that the store manager finds out that the demand has been underestimated. Specifically, the correct annual demand is 1,500 units. On the other hand, due to operational restrictions she cannot change the order quantity and thus use the same order size from part A. How much this error cost the store? (This can also be considered as a penalty for parameter misestimation).

Highknob Co is thinking about introducing a new product.Below are the possible levels of unit sales and the probabilities of their occurrence.  What is the expected value of the new product?   Possible Market Reaction Sales in Units Probabilities Low Response 20 .10 Moderate Response 40 .20 High Response 65 .40 Very High Response 80 .30

Wilderness Products, Incorporated, has designed a self-inflating sleeping pad for use by backpackers and campers. The following information is available about the new product: a. An investment of $1,350,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment needed in the manufacturing process. The company's required rate of return is 24% on all investments. b. A standard cost card has been prepared for the sleeping pad, as shown below: Direct materials Direct labor Manufacturing overhead (20% variable) Total standard cost per pad Standard Quantity or Hours 4.0 yards 2.4 hours 2.4 hours Standard Price or Rate $2.70 per yard $8.00 per hour $12.50 per hour Standard Cost $10.80 19.20 30.00 $ 60.00 c. The only variable selling and administrative expense will be a sales commission of $9 per pad. The fixed selling and administrative expenses will be $732,000 per year. d. Because the company manufactures many products, no more than 38,400 direct…

Olsen Company produces two products. Product A has a contribution margin of $30 and requires 10 machine hours. Product B has a contribution margin of $24 and requires 4 machine hours. Determine the more profitable product assuming the machine hours are the constraint. Unit contribution margin per bottleneck hour:Product A  $_____Product B  $_____ Product ____ is most profitable.