Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 9CQ
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To explain: The factor that supports the most in accepting the deal.
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U just need to give introduction and conclusion to this question.i have received the answer already.just the introductory para missing.
Sarah is a buyer for a department store. A supplier offers her a 5 percent discount if shetriples her usual order quantity. Which of the following best explains why Sarah shouldtake the deal?a. Even though the increase in the operating costs is likely to exceed the benefit of the5 percent discount, Sarah feels that her customers expect the lowest possible price.b. Sarah hopes that customers are likely to purchase more if they see an increase in theinventory in the store.c. Sarah knows that even though she may triple her order quantity, this would increaseher operating costs by far less than a factor of three.d. Sarah knows that the sum of operating costs is probably less than 5 percent of thepurchase cost, so an increase in the operating costs is unlikely to be a concern.
All of the following statements concerning shortage costs are true Except:
Shortage costs include loss of goodwill, loss of a sale, loss of a customer, loss of profits, and late penalties
Shortage costs are difficult or impossible to measure with any accuracy
High shortage costs favor small inventories
It is the cost of having no items in the inventory when it is needed by customers
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- MAY I ASK FOR THE SOLUTIONS AND ANSWERS OF NO. 12 to 17 (kindly refer to the table and the problem above it) Thank you! ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but may sometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, the supplier may take 7 days. Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also an opportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order tendays-worth of inventory. (A) Reorder Point 1. What should be the reorder point in boxes? 2. How much would the normal lead time usage be? 3. How much should ABC keep as safety stock? (B) Economic Order Quantity 4. What is the annual demand for the boxes of…arrow_forwardGive typing answer with explanation and conclusionarrow_forward13. Which of the following orders is most useful to short sellers who want to limit their potential losses? a. limit order b. discretionary order c. limit loss order d. stop buy order e. none of thesearrow_forward
- 14. 12 The purchasing manager for the Atlantic Steel Company must determine a policy for ordering coal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the firm operates 360 days per year. The purchasing manager has determined that the ordering cost is $80 per order and the cost of holding coal is 20% of the average dollar value of inventory held. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton for the coming year. a. Determine the optimal quantity of coal to receive in each order. (Ans: 1200 tons) b. Determine the total inventory-related costs associated with the optimal ordering policy (do not include the cost of the coal). (Ans: TC= $2880) c. If 5 days of lead time are required to receive an order of coal, how much coal should be on hand when an order is placed? (Ans= R=300 tons)arrow_forwardMAY I ASK FOR THE SOLUTIONS AND ANSWERS OF NOS. 12 to 17 (kindly refer to the table) Thank you! ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but may sometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, the supplier may take 7 days. Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also an opportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order tendays-worth of inventory. (A) Reorder Point 1. What should be the reorder point in boxes? 2. How much would the normal lead time usage be? 3. How much should ABC keep as safety stock? (B) Economic Order Quantity 4. What is the annual demand for the boxes of candles? 5. How much is the…arrow_forwardThat One Book sells its books through The Witch and the Wardrobe bookstores. It costs That One Book $0.80 to print each book; it sells the book to The Witch and the Wardrobe for $2.50. The Witch and the Wardrobe then sells the books at retail for $6.00. Whatever doesn’t sell gets thrown away. Demand for the book each issue is normal with a mean of 5219 and a standard deviation of 1610. To give The Witch and the Wardrobe incentive to order more books, it proposes a revenue-sharing contract. Instead of selling the book to The Witch and the Wardrobe for $2.50, That One Book will sell its books to The Witch and the Wardrobe for only $1.00. However, for each book that The Witch and the Wardrobe sells at retail, The Witch and the Wardrobe must give $2.00 back to That One Book. With this revenue sharing agreement in place, what is the optimal order amount that will maximize The Witch and the Wardrobe expected profit? Please do fast ASAParrow_forward
- After much anticipation Goople releases a new smartphone. In anticipation of the new phone, Goople's stock price increases. However, once launched, the smartphone does even more than what was anticipated and buyers are buying all of the phones available. Goople's phones are on back order for 8 months. The unexpectedly positive reaction to the smartphone would raise the present value and the price of the corporation's stock. raise the present value and reduce the price of the corporation's stock. reduce the present value and the price of the corporation's stock. reduce the present value and raise the price of the corporation's stock.arrow_forward7arrow_forwardPlease do not give solution in image formate thanku Which of the following is a method to improve cash-to-cash conversion (CCC)?Increasing payment terms from customersIncreasing inventory safety stockDecreasing payment terms from customersDecreasing payment terms from suppliersarrow_forward
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