OPERATIONS MANAGEMENT
2nd Edition
ISBN: 9781260238877
Author: CACHON
Publisher: RENT MCG
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Chapter 12, Problem 9CQ
Summary Introduction
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
Chapter 12 Solutions
OPERATIONS MANAGEMENT
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