Business, 01.06.2020 12:57 leomessifanboy678
Store-X regularly purchases product-A directly from the manufacturer. The demand of last five weeks of this product is summarized on the table next: Week Demand 1 1970 2 1980 3 2200 4 2400 5 2100 Consider following facts: • Wholesale purchase price is $50 per unit. • Due to tax, interests, and expenses of warehouse, it takes 15% of the purchase price, annually, to store one unit of product-A. • The product is ordered many times a year. Mr. Chang Young Mighty Gang, an employee from China, prepares this order. The hourly wage of Mr. Chang Young Mighty Gang is $70 per hour. To make an order, it takes 90 minutes exactly. To bring the product form the factory to Store-X, it costs $90. • After receiving the ordering request, the manufacturer takes 2 days to deliver the product. • Store-X is closed on every Friday. Based on the above data, answer following questions: a) What is the optimum quantity (Q) purchased on each order that will minimize the total expenses? b) Show that, at this optimum level, holding cost is almost equal to the ordering cost. c) What is the total cost associated with each order? d) What is the reorder point? e) How many orders will take place in a year? f) After how many working days each order will be placed?
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Store-X regularly purchases product-A directly from the manufacturer. The demand of last five weeks...
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